C 2013 10-K

Citigroup Inc (C) SEC Annual Report (10-K) for 2014

C Q2 2015 10-Q
C 2013 10-K C Q2 2015 10-Q

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, 2014

Commission file number 1-9924

Citigroup Inc.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation or organization)

52-1568099

(I.R.S. Employer Identification No.)

399 Park Avenue, New York, NY

(Address of principal executive offices)

10022

(Zip code)

(212) 559-1000

(Registrant's telephone number, including area code)


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  o

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 o No  x

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. Yes  x     No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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). Yes x   No  o

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.

Large accelerated filer  x

Accelerated filer  o

Non-accelerated filer  o

 (Do not check if a smaller reporting company)

Smaller reporting company  o

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

The aggregate market value of Citigroup Inc. common stock held by non-affiliates of Citigroup Inc. on June 30, 2014 was approximately $142.6 billion.

Number of shares of Citigroup Inc. common stock outstanding on January 31, 2015: 3,033,851,309

Documents Incorporated by Reference: Portions of the registrant's proxy statement for the annual meeting of stockholders scheduled to be held on April 28, 2015, are incorporated by reference in this Form 10-K in response to Items 10, 11, 12, 13 and 14 of Part III.

Available on the web at www.citigroup.com


FORM 10-K CROSS-REFERENCE INDEX

Item Number

Page

Part I

1.

Business

2–29, 32, 122–124,

127, 158,

307–308

1A.

Risk Factors

52–63

1B.

Unresolved Staff Comments

Not Applicable

2.

Properties

307–308

3.

Legal Proceedings-See Note 28 to the Consolidated Financial Statements

295–304

4.

Mine Safety Disclosures

Not Applicable

Part II

5.

Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities

137–138, 164, 305, 309–310

6.

Selected Financial Data

8–9

7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

4–34, 65–121

7A.

Quantitative and Qualitative Disclosures About Market Risk

65–121, 159–161, 186–220, 229–288

8.

Financial Statements and Supplementary Data

132–306

9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not Applicable

9A.

Controls and Procedures

125–126

9B.

Other Information

Not Applicable

Part III

10.

Directors, Executive Officers and Corporate Governance

311–312*

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 28, 2015, 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 "-2014 Summary Compensation Table and Compensation Information" in the Proxy Statement, incorporated herein by reference.

***

See "About the Annual Meeting," "Stock Ownership" and "Proposal 4: Approval of Additional Authorized Shares under the Citigroup 2014 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.





CITIGROUP'S 2014 ANNUAL REPORT ON FORM 10-K

OVERVIEW

2

MANAGEMENT'S DISCUSSION AND

  ANALYSIS OF FINANCIAL CONDITION AND

  RESULTS OF OPERATIONS

4

Executive Summary

4

Summary of Selected Financial Data

8

SEGMENT AND BUSINESS-INCOME (LOSS)

  AND REVENUES

10

CITICORP

12

Global Consumer Banking (GCB)

13

North America GCB

15

EMEA GCB

17

Latin America GCB

19

Asia GCB

21

Institutional Clients Group

23

Corporate/Other

27

CITI HOLDINGS

28

BALANCE SHEET REVIEW

30

OFF BALANCE SHEET

  ARRANGEMENTS

33

CONTRACTUAL OBLIGATIONS

34

CAPITAL RESOURCES

35

   Current Regulatory Capital Standards

   Overview

   Basel III Transition Arrangements

      Basel III (Full Implementation)

      Supplementary Leverage Ratio

 Regulatory Capital Standards Developments

   Tangible Common Equity, Tangible Book Value

       Per Share and Book Value Per Share

RISK FACTORS

52

Managing Global Risk Table of Contents -

  Credit, Market (Including Funding and Liquidity),

  Operational and Country and Cross-Border Risk

  Sections


64

MANAGING GLOBAL RISK

65

Overview

Citi's Risk Management Organization

Citi's Compliance Organization

SIGNIFICANT ACCOUNTING POLICIES AND

  SIGNIFICANT ESTIMATES

122

DISCLOSURE CONTROLS AND

  PROCEDURES

125

MANAGEMENT'S ANNUAL REPORT ON

  INTERNAL CONTROL OVER FINANCIAL

  REPORTING

126

FORWARD-LOOKING STATEMENTS

127

REPORT OF INDEPENDENT REGISTERED

  PUBLIC ACCOUNTING FIRM-INTERNAL

  CONTROL OVER FINANCIAL REPORTING

129

REPORT OF INDEPENDENT REGISTERED

  PUBLIC ACCOUNTING FIRM-

  CONSOLIDATED FINANCIAL STATEMENTS

130

FINANCIAL STATEMENTS AND NOTES

  TABLE OF CONTENTS

131

CONSOLIDATED FINANCIAL STATEMENTS

132

NOTES TO CONSOLIDATED FINANCIAL

  STATEMENTS

141

FINANCIAL DATA SUPPLEMENT

SUPERVISION, REGULATION AND OTHER

301

Supervision and Regulation

Competition

Properties

Disclosure Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act

UNREGISTERED SALES OF EQUITY,

  PURCHASES OF EQUITY SECURITIES,

  DIVIDENDS

303

PERFORMANCE GRAPH

CORPORATE INFORMATION

305

Citigroup Executive Officers

Citigroup Board of Directors


1



OVERVIEW


Citigroup's history dates back to the founding of the City Bank of New York 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, trade and securities services and wealth management. Citi has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions.

At December 31, 2014, Citi had approximately 241,000 full-time employees, compared to approximately 251,000 full-time employees at December 31, 2013.

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 businesses and portfolios of assets that Citigroup has determined are not central to its core Citicorp businesses. 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 3 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 U.S. Securities and Exchange Commission (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 .

Certain reclassifications, including a realignment of certain businesses, have been made to the prior periods' financial statements to conform to the current period's presentation. For information on certain recent such reclassifications, see Note 3 to the Consolidated Financial Statements.


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.



2



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

*

As previously announced, Citigroup intends to exit its consumer businesses in 11 markets and its consumer finance business in Korea in GCB and certain businesses in ICG . Effective in the first quarter of 2015, these businesses will be reported as part of Citi Holdings. For additional information, see "Executive Summary," " Global Consumer Banking " and " Institutional Clients Group " below. Citi intends to release a revised Quarterly Financial Data Supplement reflecting this realignment prior to the release of its first quarter of 2015 earnings information.


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


3



MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS


EXECUTIVE SUMMARY


Steady Progress on Execution Priorities Despite Continued Challenging Operating Environment

As discussed further throughout this Form 10-K, Citi's 2014 results reflected a continued challenging operating environment for Citi and its businesses in several respects, including:


the impact of macroeconomic uncertainty on the markets, trading environment and customer activity, particularly during the latter part of the year;

significant costs associated with legal settlements as Citi resolved its significant legacy legal issues and continued to work through its outstanding legal matters;

uneven global economic growth; and

a continued low interest rate environment.


In addition, as part of its execution priorities to improve its efficiency and reduce expenses, Citi incurred higher repositioning costs during the year, which also impacted its 2014 results of operations.

Despite these difficult decisions and challenges, Citi continued to make progress on its execution priorities in 2014, including:


Efficient resource allocation and disciplined expense management: As noted above, Citi continued to take actions to simplify and streamline the organization as well as improve productivity. As part of these efforts, Citi announced strategic actions to exit its consumer businesses in certain international markets in Global Consumer Banking ( GCB) and certain businesses in Institutional Clients Group (ICG) to focus on those markets and businesses where it believes it has the greatest scale, growth potential and ability to provide meaningful returns to its shareholders.

Wind down of Citi Holdings: Citi continued to wind down Citi Holdings, including reducing its assets by $19 billion, or 16%, from year end 2013.

Utilization of deferred tax assets (DTAs): Citi utilized approximately $3.3 billion in DTAs during 2014 (for additional information, see "Income Taxes" below).


While making progress on these initiatives in 2014, Citi expects the operating environment in 2015 to remain challenging. Regulatory changes and requirements continue to create uncertainties for Citi and its businesses. While the U.S. economy continues to improve, it remains susceptible to global events and volatility. The economic and fiscal situations of several European countries remain fragile, and geopolitical tensions in the region have added to the uncertainties. Although most emerging market economies continue to grow, growth has slowed in some markets and these economies are also susceptible to outside macroeconomic events and challenges. The frequency with which legal and regulatory proceedings are initiated against

financial institutions, and the severity of the remedies sought in these proceedings, has increased substantially over the past several years, including 2014. Financial institutions also remain a target for an increasing number of cybersecurity attacks. For a more detailed discussion of these and other risks that could impact Citi's businesses, results of operations and financial condition during 2015, see each respective business' results of operations, "Risk Factors" and "Managing Global Risk" below.

While Citi may not be able to completely control these and other factors affecting its operating environment in 2015, it will remain focused on its execution priorities, as described above, and remains committed to achieving its 2015 financial targets for Citicorp's operating efficiency ratio and Citigroup's return on assets.


2014 Summary Results


Citigroup

Citigroup reported net income of $7.3 billion or $2.20 per diluted share, compared to $13.7 billion or $4.35 per share in 2013. In 2014, Citi's results included negative $390 million (negative $240 million after-tax) of CVA/DVA, compared to negative $342 million (negative $213 million after-tax) in 2013 (for additional information, including Citi's adoption of funding valuation adjustments, or FVA, in 2014, see Note 25 to the Consolidated Financial Statements). Citi's results in 2014 also included a charge of $3.8 billion ($3.7 billion after-tax) related to the mortgage settlement announced in July 2014 regarding certain of Citi's legacy residential mortgage-backed securities and CDO activities, recorded in Citi Holdings. Results in 2014 further included a tax charge of approximately $210 million related to corporate tax reforms enacted in two states, compared to a tax benefit of $176 million in 2013 related to the resolution of certain tax audit items, both recorded in Corporate/Other . In addition, Citi's 2013 results included a net fraud loss in Mexico of $360 million ($235 million after-tax) recorded in ICG, and a $189 million after-tax benefit related to the divestiture of Credicard, Citi's non-Citibank branded cards and consumer finance business in Brazil (Credicard), recorded in Corporate/Other .

Excluding these items, Citi reported net income of $11.5 billion in 2014, or $3.55 per diluted share, compared to $13.8 billion, or $4.37 per share, in the prior year. The 16% decrease from 2013 was driven by higher expenses, a lower net loan loss reserve release and a higher effective tax rate due primarily to non-deductible legal and related expenses incurred during the year (for additional information, see Note 9 to the Consolidated Financial Statements), partially offset by increased revenues in Citi Holdings and a decline in net credit losses. (Citi's results of operations excluding the impacts of CVA/DVA, the mortgage settlement, the tax items, the net fraud loss and the Credicard divestiture are non-GAAP financial measures. Citi believes the presentation of its results of operations excluding these impacts provides a more


4



meaningful depiction for investors of the underlying fundamentals of its businesses.)

Citi's revenues, net of interest expense, were $76.9 billion in 2014, up 1% versus the prior year. Excluding CVA/DVA, revenues were $77.3 billion, also up 1% from 2013, as revenues rose 28% in Citi Holdings, partially offset by a 1% decline in Citicorp. Net interest revenues of $48.0 billion were 3% higher than 2013, mostly driven by lower funding costs. Excluding CVA/DVA, non-interest revenues were $29.3 billion, down 2% from 2013, driven by lower revenues in ICG and GCB in Citicorp, partially offset by higher non-interest revenues in Citi Holdings.


Expenses

Citigroup expenses increased 14% versus 2013 to $55.1 billion. Excluding the impact of the mortgage settlement in 2014 and the net fraud loss in 2013, operating expenses increased 7% versus the prior year to $51.3 billion driven by higher legal and related expenses ($5.8 billion compared to $3.0 billion in the prior year) and repositioning costs ($1.6 billion compared to $590 million in the prior year).

Excluding the legal and related expenses, net fraud loss in 2013, repositioning charges and the impact of foreign exchange translation into U.S. dollars for reporting purposes (FX translation), which lowered reported expenses by approximately $503 million in 2014 compared to 2013, expenses were roughly unchanged at $43.9 billion as repositioning savings, expense reductions in Citi Holdings and other productivity initiatives were fully offset by the impact of higher regulatory and compliance and volume-related costs. (Citi's results of operations excluding the impact of legal and related expenses, repositioning charges and FX translation are non-GAAP financial measures. Citi believes the presentation of its results of operations excluding these impacts provides a more meaningful depiction for investors of the underlying fundamentals of its businesses.)

Excluding the impact of the net fraud loss in 2013, Citicorp's expenses were $47.3 billion, up 12% from the prior year, primarily reflecting higher legal and related expenses, largely in Corporate/Other ($4.8 billion compared to $432 million in 2013), higher repositioning costs ($1.6 billion compared to $547 million in 2013), higher regulatory and compliance costs and higher volume-related costs, partially offset by efficiency savings. Excluding the impact of the mortgage settlement in 2014, Citi Holdings' expenses were $4.0 billion, down 34% from 2013, reflecting lower legal and related expenses as well as the ongoing decline in Citi Holdings' assets.


Credit Costs and Allowance for Loan Losses

Citi's total provisions for credit losses and for benefits and claims of $7.5 billion declined 12% from 2013. Excluding the impact of the mortgage settlement in 2014, total provisions for credit losses and for benefits and claims declined 13% to $7.4 billion versus the prior year. Net credit losses of $9.0 billion were down 14% versus the prior year. Consumer net credit losses declined 15% to $8.7 billion, reflecting continued improvements in the North America mortgage portfolio within Citi Holdings, as well as North America Citi-branded cards and Citi retail services in Citicorp. Corporate net credit losses increased 43% to $288 million in 2014. Corporate net credit losses in 2014 included approximately $113 million of incremental net credit losses related to the Pemex supplier program in Mexico (for additional information regarding the Pemex supplier program, see " Institutional Clients Group " below).

The net release of allowance for loan losses and unfunded lending commitments was $2.3 billion in 2014. Excluding the impact of the mortgage settlement in 2014, the net release of allowance for loan losses and unfunded lending commitments was $2.4 billion in 2014 compared to a $2.8 billion release in the prior year. Citicorp's net reserve release increased to $1.4 billion from $736 million in 2013 due to higher reserve releases in North America GCB and ICG , reflecting improved credit trends . Citi Holdings' net reserve release, excluding the impact of the mortgage settlement in 2014, decreased 53% to $958 million, primarily due to lower releases related to the North America mortgage portfolio (which also had lower net credit losses).

Citigroup's total allowance for loan losses was $16.0 billion at year end, or 2.50% of total loans, compared to $19.6 billion, or 2.97%, at the end of 2013. 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 $13.6 billion, or 3.68% of total consumer loans, at year end, compared to $17.1 billion, or 4.34% of total loans, at the end of 2013. The consumer 90+ days past due delinquencies were $4.6 billion, or 1.27% of consumer loans, at year end, a decline from $5.7 billion or 1.49% of loans in the prior year. Total non-accrual assets fell to $7.4 billion, a 22% reduction compared to 2013. Corporate non-accrual loans declined 38% to $1.2 billion, while Consumer non-accrual loans declined 17% to $5.9 billion, both reflecting the continued improvement in credit trends.


Capital

Despite the challenging operating environment and elevated legal and related expenses during 2014, Citi was able to maintain its regulatory capital, primarily through net income and the further reduction of its DTAs. Citigroup's Basel III Tier 1 Capital and Common Equity Tier 1 Capital ratios, on a fully implemented basis, were 11.5% and 10.6% as of December 31, 2014, respectively, compared to 11.3% and 10.6% as of December 31, 2013 (all based on the Advanced Approaches for determining risk-weighted assets). Citigroup's estimated Basel III Supplementary Leverage ratio as of December 31, 2014 was 6.0% compared to 5.4% as of


5



December 31, 2013, each based on the revised final U.S. Basel III rules. For additional information on Citi's capital ratios and related components, see "Capital Resources" below.


Citicorp

Citicorp net income decreased 32% from the prior year to $10.7 billion. CVA/DVA, recorded in ICG , was negative $343 million (negative $211 million after-tax) in 2014, compared to negative $345 million (negative $214 million after-tax) in the prior year (for a summary of CVA/DVA by business within ICG , see " Institutional Clients Group " below).

Excluding CVA/DVA as well as the impact of the net fraud loss in Mexico, the tax items and the divestiture of Credicard noted above, Citicorp's net income was $11.1 billion, down 29% from the prior year, as higher expenses, a higher effective tax rate and lower revenues were partially offset by continued improvement in credit costs.

Citicorp revenues, net of interest expense, decreased 1% from the prior year to $71.1 billion. Excluding CVA/DVA, Citicorp revenues were $71.4 billion in 2014, also down 1% from the prior year. GCB revenues of $37.8 billion decreased 1% versus the prior year. North America GCB revenues declined 1% to $19.6 billion driven by lower retail banking revenues, partially offset by higher revenues in Citi-branded cards and Citi retail services. Retail banking revenues declined 9% to $4.9 billion versus the prior year, primarily reflecting lower mortgage origination revenues and spread compression in the deposits portfolios, partially offset by volume-related growth and gains from branch sales during the year. Citi-branded cards revenues of $8.3 billion were up 1% versus the prior year as purchase sales grew and an improvement in spreads driven by a reduction in promotional rate balances mostly offset the impact of lower average loans. Citi retail services revenues increased 4% to $6.5 billion, mainly reflecting the impact of the Best Buy portfolio acquisition in September 2013, partially offset by continued declines in fee revenues primarily reflecting higher yields and improving credit and the resulting increase in contractual partner payments. North America GCB average deposits of $171 billion grew 3% year-over-year and average retail loans of $46 billion grew 9%. Average card loans of $110 billion increased 2%, and purchase sales of $252 billion increased 5% versus the prior year. For additional information on the results of operations of North America GCB for 2014, see " Global Consumer Banking-North America GCB " below.

International GCB revenues (consisting of EMEA GCB , Latin America GCB and Asia GCB ) decreased 2% versus the prior year to $18.1 billion. Excluding the impact of FX translation, international GCB revenues rose 2% from the prior year, driven by 4% growth in Latin America GCB and 1% growth in Asia GCB , partially offset by a 1% decline in EMEA GCB (for the impact of FX translation on 2014 results of operations for each of EMEA GCB, Latin America GCB and Asia GCB , see the table accompanying the discussion of each respective business' results of operations below). The growth in international GCB revenues, excluding the impact of FX translation, mainly reflected volume growth in all regions , partially offset by spread compression, the ongoing impact of regulatory changes and the repositioning of Citi's franchise in

Korea , as well as market exits in EMEA GCB in 2013. For additional information on the results of operations of EMEA GCB, Latin America GCB and Asia GCB for 2014, see " Global Consumer Banking " below. Year-over-year, international GCB average deposits increased 2%, average retail loans increased 7%, investment sales increased 8%, average card loans increased 2% and card purchase sales increased 5%, all excluding the impact of Credicard's results in the prior year period and FX translation.

ICG revenues were $33.3 billion in 2014, down 1% from the prior year. Excluding CVA/DVA, ICG revenues were $33.6 billion, also down 1% from the prior year. Banking revenues of $17.0 billion, excluding CVA/DVA and the impact of mark-to-market gains/(losses) on hedges related to accrual loans within corporate lending (see below), increased 5% from the prior year, primarily reflecting growth in investment banking, corporate lending and private bank revenues. Investment banking revenues increased 7% versus the prior year, driven by an 11% increase in advisory revenues to $949 million and an 18% increase in equity underwriting to $1.2 billion. Debt underwriting revenues of $2.5 billion were largely unchanged from 2013. Private bank revenues, excluding CVA/DVA, increased 7% to $2.7 billion from the prior year, driven by increased client volumes and growth in investment and capital markets products, partially offset by spread compression. Corporate lending revenues rose 52% to $1.9 billion, including $116 million of mark-to-market gains on hedges related to accrual loans compared to a $287 million loss in the prior year. Excluding the mark-to-market impact on hedges related to accrual loans in both periods, corporate lending revenues rose 15% versus the prior year to $1.7 billion, primarily reflecting growth in average loans and improved funding costs. Treasury and trade solutions revenues increased by 1% versus the prior year to $7.9 billion as volume and fee growth was largely offset by the impact of spread compression globally.

Markets and securities services revenues of $16.5 billion, excluding CVA/DVA, decreased 8% from the prior year. Fixed income markets revenues of $11.8 billion, excluding CVA/DVA, decreased 11% from the prior year, reflecting weakness across rates and currencies, credit markets and municipals due to challenging trading conditions, partially offset by increased securitized products and commodities revenues. The first half of 2013 included a strong performance in rates and currencies, driven in part by the impact of quantitative easing globally. Equity markets revenues of $2.8 billion, excluding CVA/DVA, declined 1% versus the prior year, mostly reflecting weakness in cash equities in EMEA driven by volatility in Europe, partially offset by strength in prime finance. Securities services revenues of $2.3 billion increased 3% versus the prior year primarily due to increased volumes, assets under custody and overall client activity. For additional information on the results of operations of ICG for 2014, see " Institutional Clients Group " below.

Corporate/Other revenues decreased to $47 million from $121 million in the prior year, driven mainly by lower revenues from sales of available-for-sale securities as well as hedging activities. For additional information on the results of


6



operations of Corporate/Other in 2014, see " Corporate/Other " below.

Citicorp end-of-period loans were roughly unchanged at $572 billion, with 1% growth in corporate loans offset by a 2% decline in consumer loans. Excluding the impact of FX translation, Citicorp loans grew 3%, with 4% growth in corporate loans and 2% growth in consumer loans.


Citi Holdings

Citi Holdings' net loss was $3.4 billion in 2014 compared to a net loss of $1.9 billion in 2013. CVA/DVA was negative $47 million (negative $29 million after-tax) in 2014, compared to positive $3 million (positive $1 million after-tax) in the prior year. Excluding the impact of CVA/DVA and the mortgage settlement in 2014, Citi Holdings' net income was $385 million, reflecting lower expenses, higher revenues and lower net credit losses, partially offset by a lower net loan loss reserve release.

Citi Holdings' revenues increased 27% to $5.8 billion from the prior year. Excluding CVA/DVA, Citi Holdings' revenues increased 28% to $5.9 billion from the prior year. Net interest revenues increased 11% year-over-year to $3.5 billion, largely driven by lower funding costs. Non-interest revenues, excluding CVA/DVA, increased 68% to $2.3 billion from the prior year, primarily driven by higher gains on assets sales and the absence of repurchase reserve builds for representation and warranty claims in 2014. For additional information on the results of operations of Citi Holdings in 2014, see "Citi Holdings" below.

Citi Holdings' assets were $98 billion, 16% below the prior year, and represented approximately 5% of Citi's total GAAP assets and 14% of its risk-weighted assets under Basel III as of year end (based on the Advanced Approaches for determining risk-weighted assets).





7



RESULTS OF OPERATIONS

SUMMARY OF SELECTED FINANCIAL DATA-PAGE 1

Citigroup Inc. and Consolidated Subsidiaries

In millions of dollars, except per-share amounts and ratios

2014

2013

2012

2011

2010

Net interest revenue

$

47,993


$

46,793


$

46,686


$

47,649


$

53,539


Non-interest revenue

28,889


29,626


22,504


29,612


32,210


Revenues, net of interest expense

$

76,882


$

76,419


$

69,190


$

77,261


$

85,749


Operating expenses

55,051


48,408


50,036


50,180


46,824


Provisions for credit losses and for benefits and claims

7,467


8,514


11,329


12,359


25,809


Income from continuing operations before income taxes

$

14,364


$

19,497


$

7,825


$

14,722


$

13,116


Income taxes

6,864


5,867


7


3,575


2,217


Income from continuing operations

$

7,500


$

13,630


$

7,818


$

11,147


$

10,899


Income (loss) from discontinued operations, net of taxes (1)

(2

)

270


(58

)

68


(16

)

Net income before attribution of noncontrolling interests

$

7,498


$

13,900


$

7,760


$

11,215


$

10,883


Net income attributable to noncontrolling interests

185


227


219


148


281


Citigroup's net income

$

7,313


$

13,673


$

7,541


$

11,067


$

10,602


Less:

Preferred dividends-Basic

$

511


$

194


$

26


$

26


$

9


Dividends and undistributed earnings allocated to employee restricted and deferred shares that contain nonforfeitable rights to dividends, applicable to basic EPS

111


263


166


186


90


Income allocated to unrestricted common shareholders for basic EPS

$

6,691


$

13,216


$

7,349


$

10,855


$

10,503


Add: Interest expense, net of tax, dividends on convertible securities and adjustment of undistributed earnings allocated to employee restricted and deferred shares with nonforfeitable rights to dividends, applicable to diluted EPS

-


1


11


17


2


Income allocated to unrestricted common shareholders for diluted EPS

$

6,691


$

13,217


$

7,360


$

10,872


$

10,505


Earnings per share


Basic


Income from continuing operations

$

2.21


$

4.27


$

2.53


$

3.71


$

3.64


Net income

2.21


4.35


2.51


3.73


3.65


Diluted

Income from continuing operations

$

2.20


$

4.26


$

2.46


$

3.60


$

3.53


Net income

2.20


4.35


2.44


3.63


3.54


Dividends declared per common share

0.04


0.04


0.04


0.03


-



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


8



SUMMARY OF SELECTED FINANCIAL DATA-PAGE 2

Citigroup Inc. and Consolidated Subsidiaries

In millions of dollars, except per-share amounts, ratios and direct staff

2014

2013

2012

2011

2010

At December 31:

Total assets

$

1,842,530


$

1,880,382


$

1,864,660


$

1,873,878


$

1,913,902


Total deposits (2)

899,332


968,273


930,560


865,936


844,968


Long-term debt

223,080


221,116


239,463


323,505


381,183


Citigroup common stockholders' equity

200,066


197,601


186,487


177,494


163,156


Total Citigroup stockholders' equity

210,534


204,339


189,049


177,806


163,468


Direct staff (in thousands)

241


251


259


266


260


Performance metrics

Return on average assets

0.39

%

0.73

%

0.39

%

0.55

%

0.53

%

Return on average common stockholders' equity (3)

3.4


7.0


4.1


6.3


6.8


Return on average total stockholders' equity (3)

3.5


6.9


4.1


6.3


6.8


Efficiency ratio (Operating expenses/Total revenues)

72


63


72


65


55


Basel III ratios - full implementation

Common Equity Tier 1 Capital (4)

10.58

%

10.59

%

8.74

%

N/A


N/A


Tier 1 Capital (4)

11.47


11.25


9.05


N/A


N/A


Total Capital (4)

12.81


12.65


10.83


N/A


N/A


Estimated supplementary leverage ratio (5)

5.96


5.43


N/A


N/A


N/A


Citigroup common stockholders' equity to assets

10.86

%

10.51

%

10.00

%

9.47

%

8.52

%

Total Citigroup stockholders' equity to assets

11.43


10.87


10.14


9.49


8.54


Dividend payout ratio (6)

1.8


0.9


1.6


0.8


NM


Book value per common share

$

66.16


$

65.23


$

61.57


$

60.70


$

56.15


Ratio of earnings to fixed charges and preferred stock dividends

1.98x


2.16x


1.37x


1.60x


1.51x


(1)

Discontinued operations include Credicard, Citi Capital Advisors and Egg Banking credit card business. See Note 2 to the Consolidated Financial Statements for additional information on Citi's discontinued operations.

(2)

Reflects reclassification of approximately $21 billion of deposits to held-for-sale ( Other liabilities) at December 31, 2014 as a result of the agreement to sell Citi's retail banking business in Japan. See " Asia GCB " below and Note 2 to the Consolidated Financial Statements.

(3)

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.

(4)

Capital ratios based on the final U.S. Basel III rules, with full implementation assumed for capital components; risk-weighted assets based on the Advanced Approaches for determining total risk-weighted assets. See "Capital Resources" below.

(5)

Citi's estimated Supplementary Leverage ratio is based on the revised final U.S. Basel III rules issued in September 2014 and represents the ratio of Tier 1 Capital to Total Leverage Exposure (TLE). TLE is the sum of the daily average of on balance sheet assets for the quarter and the average of certain off balance sheet exposures calculated as of the last day of each month in the quarter, less applicable Tier 1 Capital deductions. See "Capital Resources" below.

(6) Dividends declared per common share as a percentage of net income per diluted share.

N/A Not applicable to 2012, 2011 and 2010. See "Capital Resources" below.

NM Not meaningful


9



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

In millions of dollars

2014

2013

2012

% Change 
 2014 vs. 2013

% Change 
 2013 vs. 2012

Income (loss) from continuing operations

CITICORP

Global Consumer Banking

North America

$

4,421


$

3,910


$

4,564


13

 %

(14

)%

EMEA

(7

)

35


(61

)

NM


NM


Latin America

1,204


1,337


1,382


(10

)

(3

)

Asia

1,320


1,481


1,712


(11

)

(13

)

Total

$

6,938


$

6,763


$

7,597


3

 %

(11

)%

Institutional Clients Group







North America

$

3,896


$

3,143


$

1,598


24

 %

97

 %

EMEA

1,984


2,432


2,467


(18

)

(1

)

Latin America

1,337


1,628


1,879


(18

)

(13

)

Asia

2,304


2,211


1,890


4


17


Total

$

9,521


$

9,414


$

7,834


1

 %

20

 %

Corporate/Other

$

(5,593

)

$

(630

)

$

(1,048

)

NM


40

 %

Total Citicorp

$

10,866


$

15,547


$

14,383


(30

)%

8

 %

Citi Holdings

$

(3,366

)

$

(1,917

)

$

(6,565

)

(76

)%

71

 %

Income from continuing operations

$

7,500


$

13,630


$

7,818


(45

)%

74

 %

Discontinued operations

$

(2

)

$

270


$

(58

)

NM


NM


Net income attributable to noncontrolling interests

185


227


219


(19

)%

4

 %

Citigroup's net income

$

7,313


$

13,673


$

7,541


(47

)%

81

 %

NM Not meaningful


10



CITIGROUP REVENUES

In millions of dollars

2014

2013

2012

% Change 
 2014 vs. 2013

% Change 
 2013 vs. 2012

CITICORP

Global Consumer Banking

North America

$

19,645


$

19,776


$

20,950


(1

)%

(6

)%

EMEA

1,358


1,449


1,485


(6

)

(2

)

Latin America

9,204


9,316


8,742


(1

)

7


Asia

7,546


7,624


7,928


(1

)

(4

)

Total

$

37,753


$

38,165


$

39,105


(1

)%

(2

)%

Institutional Clients Group



North America

$

12,345


$

11,473


$

8,973


8

 %

28

 %

EMEA

9,513


10,020


9,977


(5

)

-


Latin America

4,237


4,692


4,710


(10

)

-


Asia

7,172


7,382


7,102


(3

)

4


Total

$

33,267


$

33,567


$

30,762


(1

)%

9

 %

Corporate/Other

$

47


$

121


$

128


(61

)%

(5

)%

Total Citicorp

$

71,067


$

71,853


$

69,995


(1

)%

3

 %

Citi Holdings

$

5,815


$

4,566


$

(805

)

27

 %

NM


Total Citigroup net revenues

$

76,882


$

76,419


$

69,190


1

 %

10

 %


NM Not meaningful


11



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.

Citicorp consists of the following operating businesses: Global Consumer Banking (which consists of consumer banking in North America, EMEA, Latin America and Asia ) and Institutional Clients Group (which includes Banking and Markets and securities services ). Citicorp also includes Corporate/Other . At December 31, 2014, Citicorp had $1.7 trillion of assets and $889 billion of deposits, representing 95% of Citi's total assets and 99% of Citi's total deposits, respectively.


In millions of dollars except as otherwise noted

2014

2013

2012

% Change 
 2014 vs. 2013

% Change 
 2013 vs. 2012

Net interest revenue

$

44,452


$

43,609


$

44,067


2

 %

(1

)%

Non-interest revenue

26,615


28,244


25,928


(6

)

9


Total revenues, net of interest expense

$

71,067


$

71,853


$

69,995


(1

)%

3

 %

Provisions for credit losses and for benefits and claims



Net credit losses

$

7,327


$

7,393


$

8,389


(1

)%

(12

)%

Credit reserve build (release)

(1,252

)

(826

)

(2,222

)

(52

)

63


Provision for loan losses

$

6,075


$

6,567


$

6,167


(7

)%

6

 %

Provision for benefits and claims

199


212


236


(6

)

(10

)

Provision for unfunded lending commitments

(152

)

90


40


NM


NM


Total provisions for credit losses and for benefits and claims

$

6,122


$

6,869


$

6,443


(11

)%

7

 %

Total operating expenses

$

47,336


$

42,438


$

44,773


12

 %

(5

)%

Income from continuing operations before taxes

$

17,609


$

22,546


$

18,779


(22

)%

20

 %

Income taxes

6,743


6,999


4,396


(4

)

59


Income from continuing operations

$

10,866


$

15,547


$

14,383


(30

)%

8

 %

Income (loss) from discontinued operations, net of taxes

(2

)

270


(58

)

NM


NM


Noncontrolling interests

181


211


216


(14

)

(2

)

Net income

$

10,683


$

15,606


$

14,109


(32

)%

11

 %

Balance sheet data (in billions of dollars)



Total end-of-period (EOP) assets

$

1,745


$

1,763


$

1,709


(1

)%

3

 %

Average assets

1,788


1,749


1,717


2


2


Return on average assets

0.60

%

0.89

%

0.82

%



Efficiency ratio (Operating expenses/Total revenues)

67


59


64




Total EOP loans

$

572


$

573


$

540


-


6


Total EOP deposits

889


932


863


(5

)

8


NM Not meaningful


12



GLOBAL CONSUMER BANKING

Global Consumer Banking (GCB) consists of Citigroup's four geographical consumer banking businesses that provide traditional banking services to retail customers through retail banking, commercial banking, Citi-branded cards and Citi retail services (for additional information on these businesses, see "Citigroup Segments" above). GCB is a globally diversified business with 3,280 branches in 35 countries around the world as of December 31, 2014. For the year ended December 31, 2014, GCB had $399 billion of average assets and $331 billion of average deposits.

GCB 's overall strategy is to leverage Citi's global footprint and seek to be the preeminent bank for the emerging affluent and affluent consumers in large urban centers. In credit cards and in certain retail markets, Citi serves customers in a somewhat broader set of segments and geographies.

Consistent with its strategy to continue to optimize its branch footprint and further concentrate its presence in major metropolitan areas, during 2014, Citi announced that it intends to exit its consumer businesses in the following markets: Costa Rica, El Salvador, Guatemala, Nicaragua, Panama and Peru (in Latin America ); Japan, Guam and its consumer finance business in Korea (in Asia ); and the Czech Republic, Egypt and Hungary (in EMEA ). Citi expects to substantially complete its exit from these businesses by the end of 2015. These consumer businesses, consisting of $28 billion of assets, $7 billion of consumer loans and $3 billion of deposits (excluding approximately $21 billion of deposits reclassified to held-for-sale as a result of Citi's agreement in December 2014 to sell its Japan retail banking business) as of December 31, 2014, contributed approximately $1.6 billion of revenues, $1.4 billion of expenses and a net loss of $40 million in 2014, with the loss primarily attributable to repositioning and other actions directly related to the exit plans. These businesses will be reported as part of Citi Holdings beginning in the first quarter of 2015. For additional information, see "Executive Summary" above and " Latin America GCB " and " Asia GCB " below.


In millions of dollars except as otherwise noted

2014

2013

2012

% Change 
 2014 vs. 2013

% Change 
 2013 vs. 2012

Net interest revenue

$

28,910


$

28,648


$

28,665


1

 %

-

 %

Non-interest revenue

8,843


9,517


10,440


(7

)

(9

)

Total revenues, net of interest expense

$

37,753


$

38,165


$

39,105


(1

)%

(2

)%

Total operating expenses

$

21,277


$

21,187


$

21,872


-

 %

(3

)%

Net credit losses

$

7,051


$

7,211


$

8,107


(2

)%

(11

)%

Credit reserve build (release)

(1,162

)

(669

)

(2,176

)

(74

)

69


Provision (release) for unfunded lending commitments

(23

)

37


-


NM


-


Provision for benefits and claims

199


212


237


(6

)

(11

)

Provisions for credit losses and for benefits and claims

$

6,065


$

6,791


$

6,168


(11

)%

10

 %

Income from continuing operations before taxes

$

10,411


$

10,187


$

11,065


2

 %

(8

)%

Income taxes

3,473


3,424


3,468


1


(1

)

Income from continuing operations

$

6,938


$

6,763


$

7,597


3

 %

(11

)%

Noncontrolling interests

26


17


3


53


NM


Net income

$

6,912


$

6,746


$

7,594


2

 %

(11

)%

Balance Sheet data (in billions of dollars)



Average assets

$

399


$

395


$

388


1

 %

2

 %

Return on average assets

1.73

%

1.71

%

1.98

%



Efficiency ratio

56


56


56




Total EOP assets

$

396


$

405


$

404


(2

)

-


Average deposits

331


327


322


1


2


Net credit losses as a percentage of average loans

2.37

%

2.51

%

2.87

%



Revenue by business



Retail banking

$

16,354


$

16,941


$

18,167


(3

)%

(7

)%

Cards (1)

21,399


21,224


20,938


1


1


Total

$

37,753


$

38,165


$

39,105


(1

)%

(2

)%

Income from continuing operations by business



Retail banking

$

1,776


$

1,907


$

2,794


(7

)%

(32

)%

Cards (1)

5,162


4,856


4,803


6


1


Total

$

6,938


$

6,763


$

7,597


3

 %

(11

)%

(Table continues on next page.)



13



Foreign currency (FX) translation impact

Total revenue-as reported

$

37,753


$

38,165


$

39,105


(1

)%

(2

)%

Impact of FX translation (2)

-


(674

)

(890

)



Total revenues-ex-FX

$

37,753


$

37,491


$

38,215


1

 %

(2

)%

Total operating expenses-as reported

$

21,277


$

21,187


$

21,872


-

 %

(3

)%

Impact of FX translation (2)

-


(373

)

(630

)



Total operating expenses-ex-FX

$

21,277


$

20,814


$

21,242


2

 %

(2

)%

Total provisions for LLR & PBC-as reported

$

6,065


$

6,791


$

6,168


(11

)%

10

 %

Impact of FX translation (2)

-


(122

)

(136

)



Total provisions for LLR & PBC-ex-FX

$

6,065


$

6,669


$

6,032


(9

)%

11

 %

Net income-as reported

$

6,912


$

6,746


$

7,594


2

 %

(11

)%

Impact of FX translation (2)

-


(120

)

(79

)



Net income-ex-FX

$

6,912


$

6,626


$

7,515


4

 %

(12

)%

(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 fourth quarter of 2014 average exchange rates for all periods presented.

NM Not meaningful



14



NORTH AMERICA GCB

North America GCB provides traditional banking and Citi-branded cards and Citi retail services to retail customers and small to mid-size businesses in the U.S. North America GCB 's 849 retail bank branches as of December 31, 2014 are largely concentrated in the greater metropolitan areas of New York, Chicago, Miami, Washington, D.C., Boston, Los Angeles and San Francisco.

At December 31, 2014, North America GCB had approximately 11.7 million retail banking customer accounts, $46.8 billion of retail banking loans and $171.4 billion of deposits. In addition, North America GCB had approximately 111.7 million Citi-branded and Citi retail services credit card accounts, with $114.0 billion in outstanding card loan balances.


In millions of dollars, except as otherwise noted

2014

2013

2012

% Change 
 2014 vs. 2013

% Change 
 2013 vs. 2012

Net interest revenue

$

17,200


$

16,658


$

16,460


3

 %

1

 %

Non-interest revenue

2,445


3,118


4,490


(22

)

(31

)

Total revenues, net of interest expense

$

19,645


$

19,776


$

20,950


(1

)%

(6

)%

Total operating expenses

$

9,676


$

9,850


$

10,204


(2

)%

(3

)%

Net credit losses

$

4,203


$

4,634


$

5,756


(9

)%

(19

)%

Credit reserve build (release)

(1,241

)

(1,036

)

(2,389

)

(20

)

57


Provisions for benefits and claims

41


60


70


(32

)

(14

)

Provision for unfunded lending commitments

(8

)

6


1


NM


NM


Provisions for credit losses and for benefits and claims

$

2,995


$

3,664


$

3,438


(18

)%

7

 %

Income from continuing operations before taxes

$

6,974


$

6,262


$

7,308


11

 %

(14

)%

Income taxes

2,553


2,352


2,744


9


(14

)

Income from continuing operations

$

4,421


$

3,910


$

4,564


13

 %

(14

)%

Noncontrolling interests

(1

)

2


1


NM


100


Net income

$

4,422


$

3,908


$

4,563


13

 %

(14

)%

Balance Sheet data (in billions of dollars)





Average assets

$

178


$

175


$

172


2

 %

2

 %

Return on average assets

2.48

%

2.23

%

2.65

%



Efficiency ratio

49


50


49




Average deposits

$

170.7


$

166.0


$

153.9


3


8


Net credit losses as a percentage of average loans

2.69

%

3.09

%

3.83

%



Revenue by business





Retail banking

$

4,901


$

5,376


$

6,687


(9

)%

(20

)%

Citi-branded cards

8,282


8,211


8,234


1


-


Citi retail services

6,462


6,189


6,029


4


3


Total

$

19,645


$

19,776


$

20,950


(1

)%

(6

)%

Income from continuing operations by business





Retail banking

$

349


$

411


$

1,136


(15

)%

(64

)%

Citi-branded cards

2,402


1,942


1,988


24


(2

)

Citi retail services

1,670


1,557


1,440


7


8


Total

$

4,421


$

3,910


$

4,564


13

 %

(14

)%



NM Not meaningful



15



2014 vs. 2013

Net income increased by 13% due to lower net credit losses, higher loan loss reserve releases and lower expenses, partially offset by lower revenues.

Revenues decreased 1%, with lower revenues in retail banking, partially offset by higher revenues in Citi-branded cards and Citi retail services. Net interest revenue increased 3% primarily due to an increase in average loans in Citi retail services driven by the Best Buy portfolio acquisition in September 2013 and continued volume growth in retail banking, which more than offset lower average loans in Citi-branded cards. Non-interest revenue decreased 22%, driven by lower mortgage origination revenues due to significantly lower U.S. mortgage refinancing activity and a continued decline in revenues in Citi retail services, primarily reflecting improving credit and the resulting impact on contractual partner payments, partially offset by a 5% increase in total card purchase sales to $252 billion and gains during the year from branch sales (approximately $130 million).

Retail banking revenues of $4.9 billion decreased 9% due to the lower mortgage origination revenues and spread compression in the deposit portfolios, which began to abate during the latter part of the year, partially offset by continued volume-related growth and the gains from branch sales. Consistent with GCB 's strategy, during 2014, NA GCB closed or sold over 130 branches (a 14% decline from the prior year), with announced plans to sell or close an additional 60 branches in early 2015. Average loans of $46 billion increased 9% and average deposits of $171 billion increased 3%.

Cards revenues increased 2% as average loans of $110 billion increased 3% versus 2013. In Citi-branded cards, revenues increased 1% as a 4% increase in purchase sales and higher net interest spreads, driven by the continued reduction of promotional balances in the portfolio, mostly offset lower average loans (3% decline from 2013). The decline in average loans was driven primarily by the reduction in promotional balances, and to a lesser extent, increased customer payment rates during the year. In addition, while the business experienced modest full rate loan growth during 2014, growth in full rate loan balances began to slow during the latter part of the year. Combined with the continued reduction in promotional balances, NA GCB could experience pressure on full rate loan growth during 2015.

Citi retail services revenues increased 4% primarily due to a 12% increase in average loans driven by the Best Buy acquisition, partially offset by continued declines in fee revenues primarily reflecting higher yields and improving credit and the resulting increase in contractual partner payments. Citi retail services revenues also benefited from lower funding costs, partially offset by a decline in net interest spreads due to a higher percentage of promotional balances within the portfolio. Purchase sales in Citi retail services increased 7% from 2013, driven by the acquisition of the Best Buy portfolio.

With respect to both cards portfolios, as widely publicized, U.S. gas prices declined during 2014, particularly in the fourth quarter. The decline in gas prices has negatively impacted purchase sales in the fuel portfolios, particularly in Citi retail services, and consumer savings from lower gas

prices may not result in higher spending in other spend categories. NA GCB will continue to monitor trends in this area going into 2015.

Expenses decreased 2% as ongoing cost reduction initiatives were partially offset by higher repositioning charges, increased investment spending and an increase in Citi retail services expenses due to the impact of the Best Buy portfolio acquisition. Cost reduction initiatives included the ongoing repositioning of the mortgage business due to the decline in mortgage refinancing activity, as well as continued rationalization of the branch footprint, including reducing the number of overall branches, as discussed above.

Provisions decreased 18% due to lower net credit losses (9%) and higher loan loss reserve releases (21%). Net credit losses declined in Citi-branded cards (down 14% to $2.2 billion) and in Citi retail services (down 2% to $1.9 billion). The loan loss reserve release increased to $1.2 billion due to the continued improvement in Citi-branded cards, partially offset by a lower loan loss reserve release in Citi retail services due to reserve builds for new loans originated in the Best Buy portfolio. Given the improvement in credit within the cards portfolios during 2014, NA GCB would not expect to see similar levels of loan loss reserve releases in 2015.


2013 vs. 2012

Net income decreased 14%, mainly driven by lower revenues and lower loan loss reserve releases, partially offset by lower net credit losses and expenses.

Revenues decreased 6% primarily due to lower retail banking revenues. The decline in retail banking revenues was primarily due to lower mortgage origination revenues driven by the significantly lower U.S. mortgage refinancing activity and ongoing spread compression in the deposit portfolios, partially offset by growth in average deposits, average commercial loans and average retail loans.

Cards revenues increased 1%. In Citi-branded cards, revenues were unchanged as continued improvement in net interest spreads, reflecting higher yields as promotional balances represented a smaller percentage of the portfolio total as well as lower funding costs, were offset by a decline in average loans. Citi retail services revenues increased 3% primarily due to the acquisition of the Best Buy portfolio, partially offset by improving credit and the resulting impact on contractual partner payments.

Expenses decreased 3%, primarily due to lower legal and related costs and repositioning savings, partially offset by higher mortgage origination costs and expenses in cards as a result of the Best Buy portfolio acquisition.

Provisions increased 7%, as lower net credit losses in the Citi-branded cards and Citi retail services portfolios were offset by lower loan loss reserve releases ($1.0 billion in 2013 compared to $2.4 billion in 2012), primarily related to cards, as well as reserve builds for new loans originated in the Best Buy portfolio.







16



EMEA GCB

EMEA GCB provides traditional banking and Citi-branded card services to retail customers and small to mid-size businesses, primarily in Central and Eastern Europe and the Middle East. The countries in which EMEA GCB has the largest presence are Poland, Russia and the United Arab Emirates.

At December 31, 2014, EMEA GCB had 137 retail bank branches with approximately 3.1 million retail banking customer accounts, $5.4 billion in retail banking loans, $12.8 billion in deposits, and 2.0 million Citi-branded card accounts with $2.2 billion in outstanding card loan balances.


In millions of dollars, except as otherwise noted

2014

2013

2012

% Change 
 2014 vs. 2013

% Change 
 2013 vs. 2012

Net interest revenue

$

899


$

948


$

1,010


(5

)%

(6

)%

Non-interest revenue

459


501


475


(8

)

5


Total revenues, net of interest expense

$

1,358


$

1,449


$

1,485


(6

)%

(2

)%

Total operating expenses

$

1,283


$

1,359


$

1,469


(6

)%

(7

)%

Net credit losses

$

61


$

68


$

105


(10

)%

(35

)%

Credit reserve build (release)

24


(18

)

(5

)

NM


NM


Provision for unfunded lending commitments

2


-


(1

)

100


100


Provisions for credit losses

$

87


$

50


$

99


74

 %

(49

)%

Income (loss) from continuing operations before taxes

$

(12

)

$

40


$

(83

)

NM


NM


Income taxes (benefits)

(5

)

5


(22

)

NM


NM


Income (loss) from continuing operations

$

(7

)

$

35


$

(61

)

NM


NM


Noncontrolling interests

20


11


4


82

 %

NM


Net income (loss)

$

(27

)

$

24


$

(65

)

NM


NM


Balance Sheet data (in billions of dollars)



Average assets

$

10


$

10


$

9


-

 %

11

 %

Return on average assets

(0.27

)%

0.24

%

(0.72

)%



Efficiency ratio

94


94


99




Average deposits

$

13.1


$

12.6


$

12.6


4


-


Net credit losses as a percentage of average loans

0.75

 %

0.85

%

1.40

 %



Revenue by business



Retail banking

$

844


$

868


$

873


(3

)%

(1

)%

Citi-branded cards

514


581


612


(12

)

(5

)

Total

$

1,358


$

1,449


$

1,485


(6

)%

(2

)%

Income (loss) from continuing operations by business



Retail banking

$

(30

)

$

(42

)

$

(109

)

29

 %

61

 %

Citi-branded cards

23


77


48


(70

)

60


Total

$

(7

)

$

35


$

(61

)

NM


NM


Foreign currency (FX) translation impact



Total revenues-as reported

$

1,358


$

1,449


$

1,485


(6

)%

(2

)%

Impact of FX translation (1)

-


(72

)

(77

)



Total revenues-ex-FX

$

1,358


$

1,377


$

1,408


(1

)%

(2

)%

Total operating expenses-as reported

$

1,283


$

1,359


$

1,469


(6

)%

(7

)%

Impact of FX translation (1)

-


(59

)

(79

)



Total operating expenses-ex-FX

$

1,283


$

1,300


$

1,390


(1

)%

(6

)%

Provisions for credit losses-as reported

$

87


$

50


$

99


74

 %

(49

)

Impact of FX translation (1)

-


(6

)

(6

)



Provisions for credit losses-ex-FX

$

87


$

44


$

93


98

 %

(53

)%

Net income (loss)-as reported

$

(27

)

$

24


$

(65

)

NM


NM


Impact of FX translation (1)

-


7


9




Net income (loss)-ex-FX

$

(27

)

$

31


$

(56

)

NM


NM


(1)

Reflects the impact of foreign exchange (FX) translation into U.S. dollars at the fourth quarter of 2014 average exchange rates for all periods presented.

NM

Not meaningful




17



The discussion of the results of operations for EMEA GCB below excludes the impact of FX translation for all periods presented. Presentations of the results of operations, excluding the impact of FX translation, are non-GAAP financial measures. Citi believes the presentation of EMEA GCB'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.


2014 vs. 2013

Net income declined $58 million to a net loss of $27 million as higher credit costs and lower revenues were partially offset by lower expenses.

Revenues decreased 1%, driven by lower revenues resulting from the sales of Citi's consumer operations in Turkey and Romania during 2013, spread compression and the absence of the prior-year gain related to the Turkey sale, largely offset by volume growth. Net interest revenue was roughly unchanged as spread compression was offset by growth in average retail loans. Non-interest revenue decreased 4%, mainly reflecting lower revenues due to the sales of the consumer operations in Turkey and Romania, partially offset by higher investment fees due to increased sales of higher spread investment products.

Retail banking revenues increased 2%, primarily due to increases in investment sales (3%), average deposits (5%) and average retail loans (11%), partially offset by the impact of the sales of the consumer operations in Turkey and Romania. Cards revenues declined 6%, primarily due to spread compression, interest rate caps, particularly in Poland, and the impact of the sales of the consumer operations in Turkey and Romania. Continued regulatory changes, including caps on interchange rates in Poland, and spread compression will likely continue to negatively impact revenues in EMEA GCB in 2015.

Expenses decreased 1%, primarily due to the impact of the sales of the consumer operations in Turkey and Romania and efficiency savings, which were largely offset by higher repositioning charges, continued investment spending on new internal operating platforms and volume-related expenses.

Provisions increased 98% to $87 million driven by a loan loss reserve build mainly related to Citi's consumer business in Russia due to the ongoing economic situation in Russia (as discussed below), partially offset by a 1% decline in net credit losses.


Russia

Citi's ability to grow its consumer business in Russia has been negatively impacted by actions Citi has taken to mitigate its risks and exposures in response to the ongoing political instability, such as limiting its exposure to additional credit risk. In addition, the ongoing economic situation in Russia, coupled with consumer overleveraging in the market, has negatively impacted consumer credit, particularly delinquencies in the Russian card and personal installment loan portfolios (which totaled $1.2 billion as of December 31, 2014, or 0.4% of total GCB loans), and Citi currently expects these trends could continue into 2015. Citi has taken these trends into consideration in determining its allowance for loan loss reserves. Any further actions Citi may take to mitigate its exposures or risks, or the imposition of additional sanctions (such as asset freezes) involving Russia or against Russian entities, business sectors, individuals or otherwise, could further negatively impact the results of operations of EMEA GCB . For additional information on Citi's exposures in Russia, see "Managing Global Risk-Country and Cross-Border Risk" below.



2013 vs. 2012

Net income of $31 million compared to a net loss of $56 million in 2012 as lower expenses and lower net credit losses were partially offset by lower revenues, primarily due to the impact of the sales of Citi's consumer operations in Turkey and Romania.

Revenues decreased 2%, mainly driven by the lower revenues resulting from the sales of the consumer operations in Turkey and Romania, partially offset by higher volumes in core markets and a gain related to the Turkey sale.

Retail banking revenues decreased 1%, driven by the sales of the consumer operations in Turkey and Romania, partially offset by increases in average deposits (1%) and average retail loans (13%) as well as the gain related to the Turkey sale. Cards revenues declined 4%, primarily due to spread compression and interest rate caps, particularly in Poland, and an 8% decrease in average cards loans, primarily due to the sales of the consumer operations in Turkey and Romania.

Expenses declined 6%, primarily due to repositioning savings as well as lower repositioning charges, partially offset by higher volume-related expenses and continued investment spending on new internal operating platforms.

Provisions declined 53% due to a 37% decrease in net credit losses largely resulting from the impact of the sales of the consumer operations in Turkey and Romania and a net credit recovery in the second quarter 2013.






18



LATIN AMERICA GCB

Latin America GCB 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 GCB includes branch networks throughout Latin America as well as Banco Nacional de Mexico, or Banamex, Mexico's second-largest bank, with 1,542 branches as of December 31, 2014. As previously announced, in the fourth quarter of 2014, Citi entered into an agreement to sell its consumer business in Peru (for additional information, see "Executive Summary" and " Global Consumer Banking " above).

At December 31, 2014, Latin America GCB had 1,829 retail branches, with approximately 31.5 million retail banking customer accounts, $27.7 billion in retail banking loans and $45.5 billion in deposits. In addition, the business had approximately 8.8 million Citi-branded card accounts with $10.9 billion in outstanding loan balances.


In millions of dollars, except as otherwise noted

2014

2013

2012

% Change 
 2014 vs. 2013

% Change 
 2013 vs. 2012

Net interest revenue

$

6,230


$

6,286


$

6,041


(1

)%

4

 %

Non-interest revenue

2,974


3,030


2,701


(2

)

12


Total revenues, net of interest expense

$

9,204


$

9,316


$

8,742


(1

)%

7

 %

Total operating expenses

$

5,422


$

5,392


$

5,301


1

 %

2

 %

Net credit losses

$

2,008


$

1,727


$

1,405


16

 %

23

 %

Credit reserve build (release)

151


376


254


(60

)

48


Provision (release) for unfunded lending commitments

(1

)

-


-


(100

)

-


Provision for benefits and claims

158


152


167


4


(9

)

Provisions for loan losses and for benefits and claims (LLR & PBC)

$

2,316


$

2,255


$

1,826


3

 %

23

 %

Income from continuing operations before taxes

$

1,466


$

1,669


$

1,615


(12

)%

3

 %

Income taxes

262


332


233


(21

)

42


Income from continuing operations

$

1,204


$

1,337


$

1,382


(10

)%

(3

)%

Noncontrolling interests

7


4


(2

)

75


NM


Net income

$

1,197


$

1,333


$

1,384


(10

)%

(4

)%

Balance Sheet data (in billions of dollars)





Average assets

$

80


$

82


$

80


(2

)%

3

 %

Return on average assets

1.50

%

1.65

%

1.82

%



Efficiency ratio

59


58


61




Average deposits

$

46.4


$

45.6


$

44.5


2


2


Net credit losses as a percentage of average loans

4.85

%

4.19

%

3.83

%



Revenue by business



Retail banking

$

6,000


$

6,133


$

5,841


(2

)%

5

 %

Citi-branded cards

3,204


3,183


2,901


1


10


Total

$

9,204


$

9,316


$

8,742


(1

)%

7

 %

Income from continuing operations by business





Retail banking

$

719


$

752


$

837


(4

)%

(10

)%

Citi-branded cards

485


585


545


(17

)

7


Total

$

1,204


$

1,337


$

1,382


(10

)%

(3

)%

Foreign currency (FX) translation impact





Total revenues-as reported

$

9,204


$

9,316


$

8,742


(1

)%

7

 %

Impact of FX translation (1)

-


(446

)

(426

)



Total revenues-ex-FX

$

9,204


$

8,870


$

8,316


4

 %

7

 %

Total operating expenses-as reported

$

5,422


$

5,392


$

5,301


1

 %

2

 %

Impact of FX translation (1)

-


(232

)

(297

)



Total operating expenses-ex-FX

$

5,422


$

5,160


$

5,004


5

 %

3

 %

Provisions for LLR & PBC-as reported

$

2,316


$

2,255


$

1,826


3

 %

23

 %

Impact of FX translation (1)

-


(100

)

(103

)



Provisions for LLR & PBC-ex-FX

$

2,316


$

2,155


$

1,723


7

 %

25

 %

Net income-as reported

$

1,197


$

1,333


$

1,384


(10

)%

(4

)%

Impact of FX translation (1)

-


(97

)

(31

)



Net income-ex-FX

$

1,197


$

1,236


$

1,353


(3

)%

(9

)%

(1)

Reflects the impact of foreign exchange (FX) translation into U.S. dollars at the fourth quarter of 2014 average exchange rates for all periods presented.

NM Not Meaningful




19






The discussion of the results of operations for Latin America GCB below excludes the impact of FX translation for all periods presented. Presentations of the results of operations, excluding the impact of FX translation, are non-GAAP financial measures. Citi believes the presentation of Latin America GCB'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.


2014 vs. 2013

Net income decreased 3% as higher expenses and credit costs were partially offset by higher revenues.

Revenues increased 4%, primarily due to volume growth and spread and fee growth in Mexico, partially offset by continued spread compression in the region and slower overall economic growth in certain Latin America markets, including Mexico and Brazil. Net interest revenue increased 4% due to increased volumes and stable spreads in Mexico, partially offset by the ongoing spread compression in other Latin America markets. Non-interest revenue increased 3%, primarily due to higher fees from increased volumes in retail banking and cards.

Retail banking revenues increased 3% as average loans increased 6%, investment sales increased 19% and average deposits increased 6%, partially offset by lower spreads in Brazil and Colombia. Cards revenues increased 6% as average loans increased 5% and purchase sales increased 1%, excluding the impact of Credicard's results in the prior year period (for additional information, see Note 2 to the Consolidated Financial Statements). The increase in cards revenues was partially offset by lower economic growth and slowing cards purchase sales in Mexico due to the previously disclosed fiscal reforms enacted in 2013 in Mexico, which included, among other things, higher income and other taxes that negatively impacted consumer behavior and spending. Citi expects these trends, as well as spread compression, could continue to negatively impact revenues in Latin America GCB in 2015.

Expenses increased 5%, primarily due to mandatory salary increases in certain countries, higher legal and related costs, increased repositioning charges and higher technology spending, partially offset by productivity and repositioning savings.

Provisions increased 7%, primarily due to higher net credit losses, which were partially offset by a lower loan loss reserve build. Net credit losses increased 22%, driven by portfolio growth and continued seasoning in the Mexico cards portfolio. Net credit losses were also impacted by both the slower economic growth and fiscal reforms in Mexico (as discussed above) as well as a $71 million charge-off in the fourth quarter of 2014 related to Citi's homebuilder exposure in Mexico, which was offset by a related release of previously established loan loss reserves and thus neutral to the cost of credit. The continued impact of the fiscal reforms and economic slowdown in Mexico is likely to cause net credit losses in Latin America GCB to remain elevated.



Argentina/Venezuela

For additional information on Citi's exposures in Argentina and Venezuela and the potential impact to Latin America GCB results of operations as a result of certain developments in these countries, see "Managing Global Risk-Country and Cross-Border Risk" below.


2013 vs. 2012

Net income decreased 9% as higher credit costs, higher expenses and a higher effective tax rate were partially offset by higher revenues.

Revenues increased 7%, primarily due to volume growth in retail banking and cards, partially offset by spread compression. Retail banking revenues increased 5% as average loans increased 12%, investment sales increased 13% and average deposits increased 2%. Cards revenues increased 10% as average loans increased 10% and purchase sales increased 12%, excluding the impact of Credicard's results.

Expenses increased 3% due to increased volume-related costs, mandatory salary increases in certain countries and higher regulatory costs, partially offset by lower repositioning charges and higher repositioning savings.

Provisions increased 25%, primarily due to higher net credit losses as well as a higher loan loss reserve build. Net credit losses increased 25%, primarily in the Mexico cards and personal loan portfolios, reflecting both volume growth and portfolio seasoning. The loan loss reserve build increased 52%, primarily due to an increase in reserves in Mexico related to the top three Mexican homebuilders, with the remainder due to portfolio growth and seasoning and the impact of potential losses related to hurricanes in the region during September 2013.









20



ASIA GCB

Asia GCB provides traditional banking and Citi-branded card services to retail customers and small to mid-size businesses, with the largest Citi presence in Korea, Singapore, Australia, Hong Kong, Taiwan, India, Japan, Malaysia, Indonesia, Thailand and the Philippines as of December 31, 2014. As previously announced, Citi entered into an agreement in December 2014 to sell its retail banking business in Japan (for additional information, see "Executive Summary" and " Global Consumer Banking " above).

At December 31, 2014, Asia GCB had 465 retail branches, approximately 16.4 million retail banking customer accounts, $71.8 billion in retail banking loans and $77.9 billion in deposits (excluding approximately $21 billion of deposits reclassified to held-for-sale as a result of Citi's agreement in December 2014 to sell its Japan retail banking business). In addition, the business had approximately 16.5 million Citi-branded card accounts with $18.4 billion in outstanding loan balances.

In millions of dollars, except as otherwise noted

2014

2013

2012

% Change 
 2014 vs. 2013

% Change 
 2013 vs. 2012

Net interest revenue

$

4,581


$

4,756


$

5,154


(4

)%

(8

)%

Non-interest revenue

2,965


2,868


2,774


3


3


Total revenues, net of interest expense

$

7,546


$

7,624


$

7,928


(1

)%

(4

)%

Total operating expenses

$

4,896


$

4,586


$

4,898


7

 %

(6

)%

Net credit losses

$

779


$

782


$

841


-

 %

(7

)%

Credit reserve build (release)

(96

)

9


(36

)

NM


NM


Provision for unfunded lending commitments

(16

)

31


-


NM


-


Provisions for loan losses

$

667


$

822


$

805


(19

)%

2

 %

Income from continuing operations before taxes

$

1,983


$

2,216


$

2,225


(11

)%

-

 %

Income taxes

663


735


513


(10

)

43


Income from continuing operations

$

1,320


$

1,481


$

1,712


(11

)%

(13

)%

Noncontrolling interests

-


-


-


-


-


Net income

$

1,320


$

1,481


$

1,712


(11

)%

(13

)%

Balance Sheet data (in billions of dollars)





Average assets

$

131


$

129


$

127


2

 %

2

 %

Return on average assets

1.01

%

1.15

%

1.35

%



Efficiency ratio

65


60


62




Average deposits

$

101.2


$

102.6


$

110.8


(1

)

(7

)

Net credit losses as a percentage of average loans

0.84

%

0.88

%

0.95

%



Revenue by business



Retail banking

$

4,609


$

4,564


$

4,766


1

 %

(4

)%

Citi-branded cards

2,937


3,060


3,162


(4

)

(3

)

Total

$

7,546


$

7,624


$

7,928


(1

)%

(4

)%

Income from continuing operations by business



Retail banking

$

738


$

786


$

930


(6

)%

(15

)%

Citi-branded cards

582


695


782


(16

)

(11

)

Total

$

1,320


$

1,481


$

1,712


(11

)%

(13

)%

Foreign currency (FX) translation impact



Total revenues-as reported

$

7,546


$

7,624


$

7,928


(1

)%

(4

)%

Impact of FX translation (1)

-


(156

)

(387

)



Total revenues-ex-FX

$

7,546


$

7,468


$

7,541


1

 %

(1

)%

Total operating expenses-as reported

$

4,896


$

4,586


$

4,898


7

 %

(6

)%

Impact of FX translation (1)

-


(82

)

(254

)



Total operating expenses-ex-FX

$

4,896


$

4,504


$

4,644


9

 %

(3

)%

Provisions for loan losses-as reported

$

667


$

822


$

805


(19

)%

2

 %

Impact of FX translation (1)

-


(16

)

(27

)



Provisions for loan losses-ex-FX

$

667


$

806


$

778


(17

)%

4

 %

Net income-as reported

$

1,320


$

1,481


$

1,712


(11

)%

(13

)%

Impact of FX translation (1)

-


(30

)

(57

)



Net income-ex-FX

$

1,320


$

1,451


$

1,655


(9

)%

(12

)%


(1)

Reflects the impact of foreign exchange (FX) translation into U.S. dollars at the fourth quarter of 2014 average exchange rates for all periods presented.

NM

Not meaningful







21



The discussion of the results of operations for Asia GCB below excludes the impact of FX translation for all periods presented. Presentations of the results of operations, excluding the impact of FX translation, are non-GAAP financial measures. Citi believes the presentation of Asia GCB'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.


2014 vs. 2013

Net income decreased 9%, primarily due to higher expenses, partially offset by lower credit costs and higher revenues.

Revenues increased 1%, as higher non-interest revenue was partially offset by a decline in net interest revenue. Non-interest revenue increased 5%, primarily driven by higher fee revenues (largely due to the previously disclosed distribution agreement that commenced during the first quarter of 2014), partially offset by a decline in investment sales revenues. Net interest revenue declined 2%, driven by the ongoing impact of regulatory changes, continued spread compression and the repositioning of the franchise in Korea.

Retail banking revenues increased 2%, due to the higher insurance fee revenues, partially offset by lower investment sales revenues and the repositioning of the franchise in Korea. Investment sales revenues decreased 2%, due to weaker investor sentiment reflecting overall market trends and strong prior year performance, particularly in the first half of 2013. Citi expects investment sales revenues will continue to reflect the overall capital markets environment in the region, including seasonal trends. Average retail deposits increased 1% (2% excluding Korea) and average retail loans increased 7% (9% excluding Korea).

Cards revenues decreased 1%, due to the impact of regulatory changes, particularly in Korea, Indonesia and Singapore, spread compression and customer deleveraging, largely offset by a 2% increase in average loans and a 5% increase (8% excluding Korea) in purchase sales driven by growth in China, India, Singapore and Hong Kong.

While repositioning in Korea continued to have a negative impact on year-over-year revenue comparisons in Asia GCB , revenues in Korea largely stabilized in the second half of 2014. Citi expects spread compression and regulatory changes in several markets across the region will continue to have a negative impact on Asia GCB revenues in 2015.

Expenses increased 9%, primarily due to higher repositioning charges in Korea, investment spending and volume-related growth, partially offset by higher efficiency savings.

Provisions decreased 17%, primarily due to higher loan loss reserve releases. Overall credit quality remained stable across the region during 2014.


2013 vs. 2012

Net income decreased 12%, primarily due to a higher effective tax rate and lower revenues, partially offset by lower expenses.

Revenues decreased 1%, as lower net interest revenue was partially offset by higher non-interest revenue. Net interest revenue declined 5%, primarily driven by spread compression and the repositioning of the franchise in Korea. Non-interest revenue increased 7%, mainly driven by growth in investment sales volume, despite a decrease in volumes in the second half of the year due to investor sentiment, reflecting overall market uncertainty. Retail banking revenues decreased 3%, primarily driven by spread compression and the impact of regulatory changes, partially offset by a 12% increase in investment sales revenues. Cards revenues increased 2%, as cards purchase sales increased 7% with growth across the region, partially offset by the continued impact of regulatory changes and customer deleveraging.

Expenses declined 3%, as lower repositioning charges and efficiency and repositioning savings were partially offset by increased investment spending, particularly in China cards.

Provisions increased 4%, reflecting a higher loan loss reserve build due to volume growth in China, Hong Kong, India and Singapore as well as regulatory requirements in Korea, partially offset by lower net credit losses.




22


INSTITUTIONAL CLIENTS GROUP


Institutional Clients Group (ICG) provides corporate, institutional, public sector and high-net-worth clients around the world with a full range of wholesale banking products and services, including fixed income and equity sales and trading, foreign exchange, prime brokerage, derivative services, equity and fixed income research, corporate lending, investment banking and advisory services, private banking, cash management, trade finance and securities services. ICG transacts with clients in both cash instruments and derivatives, including fixed income, foreign currency, equity and commodity products.

ICG revenue is generated primarily from fees and spreads associated with these activities. ICG 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 and Investment banking . In addition, as a market maker, ICG 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 . Interest income earned on inventory and loans held less interest paid to customers on deposits is recorded as Net interest revenue . Revenue is also generated from transaction processing and assets under custody and administration.

ICG 's international presence is supported by trading floors in approximately 80 countries and a proprietary network in over 95 countries and jurisdictions. At December 31, 2014, ICG had approximately $1.0 trillion of assets and $559 billion of deposits, while two of its businesses, securities services and issuer services, managed approximately $16.2 trillion of assets under custody compared to $14.3 trillion at the end of 2013.

As previously announced, Citi intends to exit certain businesses in ICG , including hedge fund services within Securities services , the prepaid cards business in Treasury and trade solutions , certain transfer agency operations and wealth management administration. These businesses, consisting of approximately $4 billion of assets and deposits as of December 31, 2014, contributed approximately $460 million of revenues, $600 million of operating expenses and a net loss of $80 million in 2014, with roughly half of the pre-tax loss primarily attributable to repositioning and other actions directly related to the exit plans. These businesses will be reported as part of Citi Holdings beginning in the first quarter of 2015. For additional information, see "Executive Summary" above.


In millions of dollars, except as otherwise noted

2014

2013

2012

% Change 
 2014 vs. 2013

% Change 
 2013 vs. 2012

Commissions and fees

$

4,386


$

4,344


$

4,171


1

 %

4

 %

Administration and other fiduciary fees

2,577


2,626


2,741


(2

)

(4

)

Investment banking

4,269


3,862


3,618


11


7


Principal transactions

5,908


6,491


4,330


(9

)

50


Other

363


674


(76

)

(46

)

NM


Total non-interest revenue

$

17,503


$

17,997


$

14,784


(3

)%

22

 %

Net interest revenue (including dividends)

15,764


15,570


15,978


1


(3

)

Total revenues, net of interest expense

$

33,267


$

33,567


$

30,762


(1

)%

9

 %

Total operating expenses

$

19,960


$

20,218


$

20,631


(1

)%

(2

)%

Net credit losses

$

276


$

182


$

282


52

 %

(35

)%

Provision (release) for unfunded lending commitments

(129

)

53


39


NM


36


Credit reserve release

(90

)

(157

)

(45

)

43


NM


Provisions for credit losses

$

57


$

78


$

276


(27

)%

(72

)%

Income from continuing operations before taxes

$

13,250


$

13,271


$

9,855


-

 %

35

 %

Income taxes

3,729


3,857


2,021


(3

)

91


Income from continuing operations

$

9,521


$

9,414


$

7,834


1

 %

20

 %

Noncontrolling interests

111


110


128


1


(14

)

Net income

$

9,410


$

9,304


$

7,706


1

 %

21

 %

Average assets (in billions of dollars)

$

1,058


$

1,066


$

1,044


(1

)%

2

 %

Return on average assets

0.89

%

0.87

%

0.74

%



Efficiency ratio

60


60


67




Revenues by region



North America

$

12,345


$

11,473


$

8,973


8

 %

28

 %

EMEA

9,513


10,020


9,977


(5

)

-


Latin America

4,237


4,692


4,710


(10

)

-


Asia

7,172


7,382


7,102


(3

)

4


Total

$

33,267


$

33,567


$

30,762


(1

)%

9

 %


23


Income from continuing operations by region




North America

$

3,896


$

3,143


$

1,598


24

 %

97

 %

EMEA

1,984


2,432


2,467


(18

)

(1

)

Latin America

1,337


1,628


1,879


(18

)

(13

)

Asia

2,304


2,211


1,890


4


17


Total

$

9,521


$

9,414


$

7,834


1

 %

20

 %

Average loans by region  (in billions of dollars)




North America

$

111


$

98


$

83


13

 %

18

 %

EMEA

58


55


53


5


4


Latin America

40


38


35


5


9


Asia

68


65


63


5


3


Total

$

277


$

256


$

234


8

 %

9

 %

EOP deposits by business (in billions of dollars)



Treasury and trade solutions

$

380


$

380


$

325


-


17

 %

All other ICG  businesses

179


194


199


(8

)

(3

)

Total

$

559


$

574


$

524


(3

)%

10

 %



ICG Revenue Details-Excluding CVA/DVA and Gain/(Loss) on Loan Hedges

In millions of dollars

2014

2013

2012

% Change 
 2014 vs. 2013

% Change 
 2013 vs. 2012

Investment banking revenue details

Advisory

$

949


$

852


$

715


11

 %

19

 %

Equity underwriting

1,246


1,059


731


18


45


Debt underwriting

2,508


2,500


2,656


-


(6

)

Total investment banking

$

4,703


$

4,411


$

4,102


7

 %

8

 %

Treasury and trade solutions

7,882


7,819


8,026


1


(3

)

Corporate lending - excluding gain/(loss) on loan hedges

1,742


1,513


1,576


15


(4

)

Private bank

2,653


2,487


2,394


7


4


Total banking revenues (ex-CVA/DVA and gain/(loss) on loan hedges)

$

16,980


$

16,230


$

16,098


5

 %

1

 %

Corporate lending - gain/(loss) on loan hedges (1)

$

116


$

(287

)

$

(698

)

NM


59

 %

Total banking revenues (ex-CVA/DVA and including gain/(loss) on loan hedges)

$

17,096


$

15,943


$

15,400


7

 %

4

 %

Fixed income markets

$

11,815


$

13,322


$

14,361


(11

)%

(7

)%

Equity markets

2,776


2,818


2,281


(1

)

24


Securities services

2,333


2,272


2,214


3


3


Other

(410

)

(443

)

(1,007

)

7


56


Total Markets and securities services (ex-CVA/DVA)

$

16,514


$

17,969


$

17,849


(8

)%

1

 %

Total ICG  (ex-CVA/DVA)

$

33,610


$

33,912


$

33,249


(1

)%

2

 %

CVA/DVA (excluded as applicable in lines above) (2)

(343

)

(345

)

(2,487

)

1


86


     Fixed income markets

(359

)

(300

)

(2,048

)

(20

)

85


     Equity markets

24


(39

)

(424

)

NM


91


     Private bank

(8

)

(6

)

(15

)

(33

)

60


Total revenues, net of interest expense

$

33,267


$

33,567


$

30,762


(1

)%

9

 %


(1)

Hedges on accrual loans reflect the mark-to-market on credit derivatives used to economically hedge the corporate loan accrual portfolio. The fixed premium costs of these hedges are netted against the corporate lending revenues to reflect the cost of credit protection.

(2)

2014 includes the impact of a one-time pretax charge of $430 million related to the implementation of funding valuation adjustments (FVA) on derivatives in the third quarter of 2014. For additional information, see Note 25 to the Consolidated Financial Statements. FVA is included within CVA for presentation purposes.

NM Not meaningful








24


The discussion of the results of operations for ICG below excludes the impact of CVA/DVA for all periods presented. Presentations of the results of operations, excluding the impact of CVA/DVA and the impact of gains/(losses) on hedges on accrual loans, are non-GAAP financial measures. Citi believes the presentation of ICG's results excluding the impact of these items is a more meaningful depiction of the underlying fundamentals of the business. For a reconciliation of these metrics to the reported results, see the table above.


2014 vs. 2013

Net income increased 1%, primarily driven by lower expenses and lower credit costs, largely offset by lower revenues. Excluding the impact of the net fraud loss in 2013 (see "Executive Summary" above), net income decreased 1%, primarily driven by the lower revenues and higher expenses, largely offset by the lower credit costs.


Revenues decreased 1%, reflecting lower revenues in Markets and securities services (decrease of 8%), partially offset by higher revenues in Banking (increase of 7%, 5% excluding the gains/(losses) on hedges on accrual loans). Citi expects revenues in ICG , particularly in its Markets and securities services businesses, will likely continue to reflect the overall market environment.


Within Banking :


Investment banking revenues increased 7%, reflecting a stronger overall market environment and improved wallet share with ICG 's target clients, partially offset by a modest decline in overall wallet share. The decline in overall wallet share was primarily driven by equity and debt underwriting and reflected market fragmentation. Advisory revenues increased 11%, reflecting the increased target client activity and an expansion of the overall M&A market. Equity underwriting revenues increased 18% largely in line with overall growth in market fees. Debt underwriting revenues were largely unchanged.

Treasury and trade solutions revenues increased 1%, as continued higher deposit balances, fee growth and trade activity were partially offset by the impact of spread compression globally. End-of-period deposit balances were unchanged, but increased 3% excluding the impact of FX translation, largely driven by North America . Average trade loans decreased 9% (7% excluding the impact of FX translation), as the business maintained origination volumes while reducing lower spread assets and increasing asset sales to optimize returns (see "Balance Sheet Review" below).

Corporate lending revenues increased 52%. Excluding the impact of gains/(losses) on hedges on accrual loans, revenues increased 15%, primarily due to continued growth in average loan balances and lower funding costs. (For information on Citi's corporate credit exposure to the energy sector, see "Managing Global Risk-Credit Risk-Corporate Credit Details" below.)

Private bank revenues increased 7% due to growth in client business volumes and improved spreads in banking, higher capital markets activity and an increase in assets under management in managed investments, partially offset by continued spread compression in lending.



Within Markets and securities services :


Fixed income markets revenues decreased 11%, driven by a decrease in rates and currencies revenues, partially offset by increased securitized products and commodities revenues. Rates and currencies revenues declined due to historically muted levels of volatility, uncertainties around Russia and Greece and lower client activity in the first half of 2014. In addition, the first half of 2013 included a strong performance in rates and currencies, driven in part by the impact of quantitative easing globally. Municipals and credit markets revenues declined due to challenging trading conditions resulting from macroeconomic uncertainties, particularly in the fourth quarter of 2014. These declines were partially offset by increased securitized products and commodities revenues, largely in North America .

Equity markets revenues decreased 1%, primarily reflecting weakness in EMEA , particularly cash equities, driven by volatility in Europe, largely offset by improved performance in prime finance due to increased customer flows.

Securities services revenues increased 3% due to increased volumes, assets under custody and overall client activity.


Expenses decreased 1%, as efficiency savings, the absence of the net fraud loss in 2014 and lower performance-based compensation was partially offset by higher repositioning charges and legal and related expenses as well as increased regulatory and compliance costs. Excluding the impact of the net fraud loss, expenses increased 1%, as higher repositioning charges and legal and related expenses as well as increased regulatory and compliance costs were partially offset by efficiency savings and lower performance-based compensation.

Provisions decreased 27%, primarily reflecting an improvement in the provision for unfunded lending commitments in the corporate loan portfolio, partially offset by higher net credit losses and a lower loan loss reserve release driven by the overall economic environment. Net credit losses increased 52%, largely related to the Petróleos Mexicanos (Pemex) supplier program in the first quarter of 2014 (for additional information, see Citi's Form 8-K filed with the SEC on February 28, 2014) as well as write-offs related to a specific counterparty. For information on certain legal and regulatory matters related to the Pemex supplier program, see Note 28 to the Consolidated Financial Statements.


Russia

Citi continues to monitor and manage its exposures in ICG resulting from the instability in Russia and Ukraine. As discussed above, the ongoing uncertainties created by the instability in the region have impacted markets in the region, including certain of Citi's markets businesses, and could


25


continue to do so in the future. Any actions Citi may take to mitigate its exposures or risks, or the imposition of additional sanctions (such as asset freezes) involving Russia or against Russian entities, business sectors, individuals or otherwise, could negatively impact the results of operations of EMEA ICG . For additional information on Citi's exposures in these countries, see "Managing Global Risk-Country and Cross-Border Risk" below.


2013 vs. 2012

Net income increased 3%, primarily driven by higher revenues and lower expenses and credit costs, partially offset by a higher effective tax rate.


Revenues increased 2%, primarily reflecting higher revenues in Banking (increase of 4%, 1% excluding the gains/(losses) on hedges on accrual loans) and in Markets and securities services (increase of 1%).


Within Banking :


Investment banking revenues increased 8%, reflecting gains in overall investment banking wallet share. Advisory revenues increased 19%, reflecting an improvement in wallet share, despite a contraction in the overall M&A market wallet. Equity underwriting revenues increased 45%, driven by improved wallet share and increased market activity, particularly initial public offerings. Debt underwriting revenues decreased 6%, primarily due to lower bond underwriting fees and a decline in wallet share during the year.

Treasury and trade solutions revenues decreased 3%, as the ongoing impact of spread compression globally was partially offset by higher balances and fee growth. Average deposits increased 7% and average trade loans increased 22%, including the impact of the consolidation of approximately $7 billion of trade loans during the second quarter of 2013.

Corporate lending revenues increased 40%. Excluding the impact of gains/(losses) on hedges on accrual loans, revenues decreased 4%, primarily due to increased hedge premium costs and moderately lower loan balances, partially offset by higher spreads.

Private bank revenues increased 4%, with growth across all regions and products, particularly in managed investments, where growth reflected both higher client assets under management and increased placement fees, as well as in capital markets. Revenue growth in lending and deposits, primarily driven by growth in client volumes, was partially offset by continued spread compression.


Within Markets and securities services :


Fixed income markets revenues decreased 7%, primarily reflecting industry-wide weakness in rates and currencies, partially offset by strong performance in credit-related and securitized products and commodities. Rates and currencies performance was lower compared to a strong 2012 that benefited from increased client revenues and a more liquid market environment, particularly in EMEA . 2013 results also reflected a general slowdown in client activity exacerbated by uncertainty around the tapering of

quantitative easing as well as geopolitical issues. Credit-related and securitized products results reflected increased client activity driven by improved market conditions and demand for spread products.

Equity markets revenues increased 24%, primarily due to market share gains, continued improvement in cash and derivative trading performance and a more favorable market environment.

Securities services revenues increased 3%, as settlement volumes increased 15% and assets under custody increased 8%, partially offset by spread compression related to deposits.


Expenses decreased 2%, primarily reflecting repositioning savings, the impact of lower performance-based compensation, lower repositioning charges and the impact of FX translation, partially offset by the net fraud loss in 2013 as well as higher legal and related costs and volume-related expenses. Excluding the impact of the net fraud loss, expenses decreased 4%, primarily reflecting repositioning savings, the impact of lower performance-based compensation, lower repositioning charges and the impact of FX translation, partially offset by higher legal and related costs and volume-related expenses.

Provisions decreased 72%, primarily reflecting higher loan loss reserve releases and lower net credit losses.





26



CORPORATE/OTHER

Corporate/Other includes certain unallocated costs of 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, 2014, Corporate/Other had $329 billion of assets, or 18% of Citigroup's total assets, consisting primarily of Citi's liquidity portfolio (approximately $80 billion of cash and cash equivalents and $197 billion of liquid investment securities). For additional information, see "Balance Sheet Review" and "Managing Global Risk-Market Risk-Funding and Liquidity" below.


In millions of dollars

2014

2013

2012

% Change 
 2014 vs. 2013

% Change 
 2013 vs. 2012

Net interest revenue

$

(222

)

$

(609

)

$

(576

)

64

 %

(6

)%

Non-interest revenue

269


730


704


(63

)

4


Total revenues, net of interest expense

$

47


$

121


$

128


(61

)%

(5

)%

Total operating expenses

$

6,099


$

1,033


$

2,270


NM


(54

)%

Provisions for loan losses and for benefits and claims

-


-


(1

)

-

 %

100


Loss from continuing operations before taxes

$

(6,052

)

$

(912

)

$

(2,141

)

NM


57

 %

Benefits for income taxes

(459

)

(282

)

(1,093

)

(63

)%

74


Loss from continuing operations

$

(5,593

)

$

(630

)

$

(1,048

)

NM


40

 %

Income (loss) from discontinued operations, net of taxes

(2

)

270


(58

)

NM


NM


Net loss before attribution of noncontrolling interests

$

(5,595

)

$

(360

)

$

(1,106

)

NM


67

 %

Noncontrolling interests

44


84


85


(48

)%

(1

)

Net loss

$

(5,639

)

$

(444

)

$

(1,191

)

NM


63

 %

NM Not meaningful


2014 vs. 2013

The net loss increased $5.2 billion to $5.6 billion, primarily due to higher legal and related expenses.

Revenues decreased 61%, primarily driven by lower revenues from sales of available-for-sale (AFS) securities as well as hedging activities.

Expenses increased $5.1 billion to $6.1 billion, largely driven by the higher legal and related expenses ($4.4 billion compared to $172 million in 2013) as well as increased regulatory and compliance costs and higher repositioning charges.





2013 vs. 2012

The net loss decreased $747 million to $444 million, primarily due to lower expenses and the $189 million after-tax benefit from the sale of Credicard, partially offset by a lower tax benefit.

Revenues decreased $7 million, driven by lower revenue from sales of AFS securities in 2013, partially offset by higher revenues from debt repurchases and hedging gains.

Expenses decreased 54%, largely driven by lower legal and related costs and repositioning charges.






27



CITI HOLDINGS

Citi Holdings contains businesses and portfolios of assets that Citigroup has determined are not central to its core Citicorp businesses. Consistent with this determination, as previously announced, beginning in the first quarter of 2015, Citi's consumer operations in 11 markets, as well as the consumer finance business in Korea, and certain businesses in ICG , will be reported as part of Citi Holdings (see "Executive Summary," " Global Consumer Banking " and " Institutional Clients Group " above).

As of December 31, 2014, Citi Holdings assets were approximately $98 billion, a decrease of 16% year-over-year and 5% from September 30, 2014. The decline in assets of $5 billion from September 30, 2014 primarily consisted of divestitures and run-off. As of December 31, 2014, consumer assets in Citi Holdings were approximately $87 billion, or approximately 89% of Citi Holdings assets. Of the consumer assets, approximately $59 billion, or 68%, consisted of North America mortgages (residential first mortgages and home equity loans), including consumer mortgages originated by Citi's legacy CitiFinancial North America business (approximately $10 billion, or 17%, of the $59 billion as of December 31, 2014). As of December 31, 2014, Citi Holdings represented approximately 5% of Citi's GAAP assets and 14% of its risk-weighted assets under Basel III (based on the Advanced Approaches for determining risk-weighted assets).


In millions of dollars, except as otherwise noted

2014

2013

2012

% Change 
 2014 vs. 2013

% Change 
 2013 vs. 2012

Net interest revenue

$

3,541


$

3,184


$

2,619


11

 %

22

 %

Non-interest revenue

2,274


1,382


(3,424

)

65


NM


Total revenues, net of interest expense

$

5,815


$

4,566


$

(805

)

27

 %

NM


Provisions for credit losses and for benefits and claims



Net credit losses

$

1,646


$

3,070


$

5,842


(46

)%

(47

)%

Credit reserve release

(893

)

(2,033

)

(1,551

)

56


(31

)

Provision for loan losses

$

753


$

1,037


$

4,291


(27

)%

(76

)%

Provision for benefits and claims

602


618


651


(3

)

(5

)

Release for unfunded lending commitments

(10

)

(10

)

(56

)

-


82


Total provisions for credit losses and for benefits and claims

$

1,345


$

1,645


$

4,886


(18

)%

(66

)%

Total operating expenses

$

7,715


$

5,970


$

5,263


29

 %

13

 %

Loss from continuing operations before taxes

$

(3,245

)

$

(3,049

)

$

(10,954

)

(6

)%

72

 %

Income taxes (benefits)

121


(1,132

)

(4,389

)

NM


74


Loss from continuing operations

$

(3,366

)

$

(1,917

)

$

(6,565

)

(76

)%

71

 %

Noncontrolling interests

$

4


$

16


$

3


(75

)%

NM


Citi Holdings net loss

$

(3,370

)

$

(1,933

)

$

(6,568

)

(74

)%

71

 %

Total revenues, net of interest expense (excluding CVA/DVA)



Total revenues-as reported

$

5,815


$

4,566


$

(805

)

27

 %

NM


     CVA/DVA (1)

(47

)

3


157


NM


(98

)%

Total revenues-excluding CVA/DVA

$

5,862


$

4,563


$

(962

)

28

 %

NM


Balance sheet data (in billions of dollars)



Average assets

$

109


$

135


$

194


(19

)%

(30

)%

Return on average assets

(3.09

)%

(1.43

)%

(3.39

)%



Efficiency ratio

133

 %

131

 %

(654

)%



Total EOP assets

$

98


$

117


$

156


(16

)

(25

)

Total EOP loans

73


93


116


(21

)

(20

)

Total EOP deposits

10


36


68


(72

)

(47

)


(1)

2014 includes the impact of a one-time pretax charge of $44 million related to the implementation of funding valuation adjustments (FVA) on derivatives in the third quarter of 2014. For additional information, see Note 25 to the Consolidated Financial Statements. FVA is included within CVA for presentation purposes.

NM Not meaningful







28



The discussion of the results of operations for Citi Holdings below excludes the impact of CVA/DVA for all periods presented. Presentations of the results of operations, excluding the impact of CVA/DVA, are non-GAAP financial measures. Citi believes the presentation of Citi Holdings' results excluding the impact of CVA/DVA is a more meaningful depiction of the underlying fundamentals of the business. For a reconciliation of these metrics to the reported results, see the table above.


2014 vs. 2013

The net loss increased by $1.4 billion to $3.3 billion, largely due to the impact of the mortgage settlement in July 2014 (see "Executive Summary" above), partially offset by higher revenues and lower cost of credit. Excluding the mortgage settlement, net income increased by $2.3 billion to $385 million, primarily due to lower expenses, higher revenues and lower net credit losses, partially offset by a lower net loan loss reserve release.

Revenues increased 28%, primarily driven by gains on asset sales, including the sales of the consumer operations in Greece and Spain in the third quarter of 2014, lower funding costs and the absence of residential mortgage repurchase reserve builds for representation and warranty claims in 2014, partially offset by losses on the redemption of debt associated with funding Citi Holdings assets.

Expenses increased 29%, principally reflecting higher legal and related costs ($4.7 billion compared to $2.6 billion in 2013) due to the mortgage settlement, partially offset by lower expenses driven by the ongoing decline in assets. Excluding the impact of the mortgage settlement, expenses declined 34%, primarily driven by lower legal and related costs ($986 million compared to $2.6 billion in 2013) as well as the ongoing decline in assets.

Provisions decreased 18%, driven by lower net credit losses, partially offset by a lower net loss reserve release. Excluding the impact of the mortgage settlement, provisions declined 22%, driven by a 46% decline in net credit losses primarily due to continued improvements in North America mortgages and overall lower asset levels. The net reserve release decreased 56% to $903 million, primarily due to lower releases related to the North America mortgage portfolio, partially offset by lower losses on asset sales. Excluding the impact of the mortgage settlement, the net reserve release decreased 53%. Loan loss reserves related to the North America mortgage portfolio were utilized to nearly fully offset net credit losses in the portfolio in 2014.


2013 vs. 2012

The net loss decreased by 71% to $1.9 billion. 2012 included the pretax loss of $4.7 billion ($2.9 billion after-tax) related to the sale of the Morgan Stanley Smith Barney joint venture (MSSB) to Morgan Stanley. Excluding the MSSB loss, the net loss decreased to $1.9 billion from a net loss of $3.8 billion in 2012, due to significantly lower provisions for credit losses and higher revenues, partially offset by higher expenses.

Revenues increased to $4.6 billion, primarily due to the absence of the MSSB loss. Excluding the MSSB loss, revenues increased 23%, primarily driven by lower funding costs and lower residential mortgage repurchase reserve builds for representation and warranty claims ($470 million, compared to $700 million in 2012).

Expenses increased 13%, primarily due to higher legal and related costs ($2.6 billion in 2013 compared to

$1.2 billion in 2012), driven largely by legacy private-label securitization and other mortgage-related issues, partially offset by lower overall assets. Excluding legal and related costs, expenses declined 18% versus 2012.

Provisions decreased 66%, driven by the absence of incremental net credit losses relating to the national mortgage settlement and those required by Office of the Comptroller of the Currency (OCC) guidance during 2012 (for additional information, see Note 16 to the Consolidated Financial Statements), as well as improved credit in North America mortgages and overall lower asset levels. Loan loss reserve releases increased 27% to $2 billion, which included a loan loss reserve release of approximately $2.2 billion related to the North America mortgage portfolio, partially offset by losses on asset sales.


Japan Consumer Finance

In 2008, Citi decided to exit its Japan Consumer Finance business and has liquidated approximately 95% of the portfolio since that time. As of December 31, 2014, Citi's Japan Consumer Finance business had approximately $151 million in outstanding loans that currently charge or have previously charged interest rates in the "gray zone" (interest at rates that are legal but may not be enforceable and thus may subject Citi to customer refund claims), compared to approximately $278 million as of December 31, 2013. Although the portfolio has largely been liquidated, Citi could 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.

At December 31, 2014, Citi's reserves related to customer refunds in the Japan Consumer Finance business were $442 million, compared to $434 million at December 31, 2013. The increase in the total reserve year-over-year primarily resulted from net reserve builds in 2014 ($248 million compared to $28 million in 2013) due to less than expected declines in customer refund claims, partially offset by payments made to customers and a continuing reduction in the population of current and former customers who are eligible to make refund claims.

Citi continues to monitor and evaluate trends and developments relating to the charging of gray zone interest, including customer defaults, refund claims and litigation, and financial, legislative, regulatory, judicial and other political developments, as well as the potential impact to both currently and previously outstanding loans in this legacy business and its reserves related thereto. Citi could be subject to additional losses as a result of these developments and the impact on Citi is subject to uncertainty and continues to be difficult to predict.




29



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 a description of and additional information on each of these balance sheet categories, see Notes 11 , 13 , 14 , 15 and 18 to the Consolidated Financial Statements. For additional information on Citigroup's liquidity resources, including its deposits, short-term and long-term debt and secured financing transactions, see "Managing Global Risk-Market Risk-Funding and Liquidity Risk" below.

In billions of dollars

Dec. 31, 2014

September 30,
2014

Dec. 31, 2013

EOP

4Q14 vs. 3Q14

Increase

(decrease)

%

Change

EOP

4Q14 vs. 4Q13

Increase

(decrease)

%

Change

Assets

Cash and deposits with banks

$

160


$

179


$

199


$

(19

)

(11

)%

$

(39

)

(20

)%

Federal funds sold and securities borrowed or purchased under agreements to resell

243


245


257


(2

)

(1

)

(14

)

(5

)

Trading account assets

297


291


286


6


2


11


4


Investments

333


333


309


-


-


24


8


Loans, net of unearned income

645


654


665


(9

)

(1

)

(20

)

(3

)

Allowance for loan losses

(16

)

(17

)

(19

)

1


(6

)

3


(16

)

Loans, net

629


637


646


(8

)

(1

)

(17

)

(3

)

Other assets

181


198


183


(17

)

(9

)

(2

)

(1

)

Total assets

$

1,843


$

1,883


$

1,880


$

(40

)

(2

)%

$

(37

)

(2

)%

Liabilities

Deposits

$

899


$

943


$

968


$

(44

)

(5

)%

$

(69

)

(7

)%

Federal funds purchased and securities loaned or sold under agreements to repurchase

173


176


204


(3

)

(2

)

(31

)

(15

)

Trading account liabilities

139


137


109


2


1


30


28


Short-term borrowings

58


65


59


(7

)

(11

)

(1

)

(2

)

Long-term debt

223


224


221


(1

)

-


2


1


Other liabilities

139


124


113


15


12


26


23


Total liabilities

$

1,631


$

1,669


$

1,674


$

(38

)

(2

)%

$

(43

)

(3

)%

Total equity

212


214


206


(2

)

(1

)

6


3


Total liabilities and equity

$

1,843


$

1,883


$

1,880


$

(40

)

(2

)%

$

(37

)

(2

)%

ASSETS


Cash and Deposits with Banks

Cash and deposits with banks decreased from the prior-year period as Citi continued to grow its investment portfolio to manage its interest rate position and deploy its excess liquidity. Average cash balances were $182 billion in the fourth quarter of 2014 compared to $204 billion in the fourth quarter of 2013.


Federal Funds Sold and Securities Borrowed or Purchased Under Agreements to Resell (Reverse Repos)

The decline in reverse repos and securities borrowing transactions from the prior-year period was due to the impact of FX translation and continued optimization of Citi's secured lending (for additional information, see "Managing Global Risk-Market Risk-Funding and Liquidity Risk"

below), partially offset by increased short trading in the Markets and securities services businesses within ICG.


Trading Account Assets

Trading account assets increased from the prior-year period, as increased market volatility, particularly in rates and currencies within Markets and securities services within ICG , increased the carrying value of Citi's derivatives positions. Average trading account assets were $309 billion in the fourth quarter of 2014 compared to $292 billion in the fourth quarter of 2013.


Investments

The increase in investments year-over-year reflected Citi's continued deployment of its excess cash (as discussed above) by investing in available-for-sale securities, particularly in U.S. treasuries.


30



Loans

The impact of FX translation on Citi's reported loans was a negative $17 billion versus the prior-year period and negative $10 billion sequentially.

Excluding the impact of FX translation, Citi's loans decreased 1% from the prior-year period, as 3% loan growth in Citicorp was offset by the continued declines in Citi Holdings. Consumer loans grew 2% year-over-year, driven by 4% growth internationally. Corporate loans grew 4% year-over-year. Traditional corporate lending balances grew 4%, with growth in North America driven by higher client transaction activity. Treasury and trade solutions loans decreased 8%, as Citi maintained trade origination volumes while reducing lower spread assets and increasing asset sales to optimize returns. Private bank and markets loans increased 16%, led by growth in the North America private bank, contributing to the revenue growth in that business. Citi Holdings loans decreased 21% year-over-year, mainly due to continued runoff and asset sales in the North America mortgage portfolio as well as the sales of the Greece and Spain consumer operations in the third quarter of 2014.

Sequentially, loans were relatively unchanged, excluding the impact of FX translation, as the decline in Citi Holdings loans was offset by continued growth in Citicorp, driven by consumer loans.

During the fourth quarter of 2014, average loans of $651 billion yielded an average rate of 6.7%, compared to $659 billion and 6.7% in the third quarter of 2014 and $659 billion and 7.0% in the fourth quarter of 2013.

For further information on Citi's loan portfolios, see "Managing Global Risk-Credit Risk" and "- Country Risk" below.


Other Assets

The fluctuations in other assets during the periods presented were largely changes in brokerage receivables driven by normal business activities.



LIABILITIES


Deposits

For a discussion of Citi's deposits, see "Managing Global Risk-Market Risk-Funding and Liquidity Risk" below.


Federal Funds Purchased and Securities Loaned or Sold Under Agreements to Repurchase (Repos)

Citi's federal funds purchased were not significant for the periods presented. The decrease in repos and securities lending transactions was due to the impact of FX translation and the continued optimization of secured funding.

For further information on Citi's secured financing transactions, see "Managing Global Risk-Market Risk-Funding and Liquidity" below.


Trading Account Liabilities

The increase in trading account liabilities from the prior-year period was consistent with and driven by the increase in trading account assets, as discussed above. Average trading account liabilities were $147 billion during the fourth quarter of 2014, compared to $112 billion in the fourth quarter of 2013.


Debt

For information on Citi's long-term and short-term debt borrowings, see "Managing Global Risk-Market Risk-Funding and Liquidity Risk" below.


Other Liabilities

The increase in other liabilities from the prior-year period was driven by the reclassification to held-for-sale of approximately $21 billion of deposits as a result of Citi's entry into an agreement in December 2014 to sell its Japan retail banking business, as well as changes in the levels of brokerage payables driven by normal business activities.




31



Segment Balance Sheet (1)

In millions of dollars

Global

Consumer

Banking

Institutional

Clients

Group

Corporate/Other

and

Consolidating

Eliminations (2)

Subtotal

Citicorp

Citi

Holdings

Citigroup

Parent

Company-

Issued

Long-Term

Debt and

Stockholders'

Equity (3)

Total

Citigroup

Consolidated

Assets

Cash and deposits with banks

$

17,192


$

62,245


$

79,701


$

159,138


$

1,059


$

-


$

160,197


Federal funds sold and securities borrowed or purchased under agreements to resell

5,317


236,211


-


241,528


1,042


-


242,570


Trading account assets

7,328


284,922


754


293,004


3,782


-


296,786


Investments

26,395


90,434


205,805


322,634


10,809


-


333,443


Loans, net of unearned income and


allowance for loan losses

287,934


272,002


-


559,936


68,705


-


628,641


Other assets

51,885


74,259


42,284


168,428


12,465


-


180,893


Total assets

$

396,051


$

1,020,073


$

328,544


$

1,744,668


$

97,862


$

-


$

1,842,530


Liabilities and equity

Total deposits (4)

$

307,626


$

558,926


$

22,803


$

889,355


$

9,977


$

-


$

899,332


Federal funds purchased and securities loaned or sold under agreements to repurchase

5,826


167,500


-


173,326


112


-


173,438


Trading account liabilities

19


138,195


-


138,214


822


-


139,036


Short-term borrowings

396


46,664


11,229


58,289


46


-


58,335


Long-term debt

1,939


35,411


29,349


66,699


6,869


149,512


223,080


Other liabilities

39,210


74,353


15,181


128,744


8,520


-


137,264


Net inter-segment funding (lending)

41,035


(976

)

248,471


288,530


71,516


(360,046

)

-


Total liabilities

$

396,051


$

1,020,073


$

327,033


$

1,743,157


$

97,862


$

(210,534

)

$

1,630,485


Total equity

-


-


1,511


1,511


-


210,534


212,045


Total liabilities and equity

$

396,051


$

1,020,073


$

328,544


$

1,744,668


$

97,862


$

-


$

1,842,530



(1)

The supplemental information presented in the table above reflects Citigroup's consolidated GAAP balance sheet by reporting segment as of December 31, 2014 . The respective segment information depicts the assets and liabilities managed by each segment as of such date. While this presentation is not defined by GAAP, Citi believes that these non-GAAP financial measures enhance investors' understanding of the balance sheet components managed by the underlying business segments, as well as the beneficial inter-relationships of the asset and liability dynamics of the balance sheet components among Citi's business segments.

(2)

Consolidating eliminations for total Citigroup and Citigroup parent company assets and liabilities are recorded within the Corporate/Other segment.

(3)

The total stockholders' equity and the majority of long-term debt of Citigroup reside in the Citigroup parent company Consolidated Balance Sheet. Citigroup allocates stockholders' equity and long-term debt to its businesses through inter-segment allocations as shown above.

(4)

Reflects reclassification of approximately $21 billion of deposits to held-for-sale ( Other liabilities) at December 31, 2014 as a result of the agreement to sell Citi's retail banking business in Japan.



32



OFF BALANCE SHEET ARRANGEMENTS


Citigroup enters into various types of off balance sheet arrangements in the ordinary course of business. Citi's involvement in these arrangements can take many different forms, including without limitation:


purchasing or retaining residual and other interests in unconsolidated special purpose entities, such as credit card receivables and mortgage-backed and other asset-backed securitization entities;

holding senior and subordinated debt, interests in limited and general partnerships and equity interests in other unconsolidated special purpose entities;

providing guarantees, indemnifications, loan commitments, letters of credit and representations and warranties; and

entering into operating leases for property and equipment.


Citi enters into these arrangements for a variety of business purposes. For example, securitization arrangements offer investors access to specific cash flows and risks created through the securitization process. Securitization arrangements also assist Citi and Citi's customers in monetizing their financial assets and securing financing at more favorable rates than Citi or the customers could otherwise obtain.

The table below shows where a discussion of Citi's various off balance sheet arrangements may be found in this Form 10-K. In addition, see Notes 1, 22 and 27 to the Consolidated Financial Statements.

Types of Off Balance Sheet Arrangements Disclosures in this Form  10-K

Variable interests and other obligations, including contingent obligations, arising from variable interests in nonconsolidated VIEs

See Note 22 to the Consolidated Financial Statements.

Letters of credit, and lending and other commitments

See Note 27 to the Consolidated Financial Statements.

Guarantees

See Note 27 to the Consolidated Financial Statements.

Leases

See Note 27 to the Consolidated Financial Statements.


33



CONTRACTUAL OBLIGATIONS


The following table includes information on Citigroup's contractual obligations, as specified and aggregated pursuant to SEC requirements.

Contractual obligations by year

In millions of dollars

2015

2016

2017

2018

2019

Thereafter

Total

Long-term debt obligations-principal (1)

$

31,070


$

42,128


$

40,249


$

22,017


$

22,117


$

65,499


$

223,080


Long-term debt obligations-interest payments (2)

6,932


5,710


4,334


3,294


2,557


33,895


56,722


Operating and capital lease obligations

1,415


1,192


964


771


679


4,994


10,015


Purchase obligations (3)

1,245


676


657


408


188


223


3,397


Other liabilities (4)

31,120


693


955


264


213


4,282


37,527


Total

$

71,782


$

50,399


$

47,159


$

26,754


$

25,754


$

108,893


$

330,741



(1)

For additional information about long-term debt obligations, see "Managing Global Risk-Market Risk-Funding and Liquidity" below and Note 18 to the Consolidated Financial Statements.

(2)

Contractual obligations related to interest payments on long-term debt for 2015-2019 are calculated by applying the December 31, 2014 weighted- average interest rate (3.34%) on average outstanding long-term debt to the average remaining contractual obligations on long-term debt for each of those years. The "Thereafter" interest payments on long-term debt for the remaining years to maturity (for 2020-2098) are calculated by applying interest rates on the remaining contractual obligations on long-term debt for each of those years.

(3)

Purchase obligations consist of obligations to purchase goods or services that are enforceable and legally binding on Citi. For presentation purposes, purchase obligations are included in the table above through the termination date of the respective agreements, even if the contract is renewable. Many of the purchase agreements for goods or services include clauses that would allow Citi to cancel the agreement with specified notice; however, that impact is not included in the table above (unless Citi has already notified the counterparty of its intention to terminate the agreement).

(4)

Other liabilities reflected on Citigroup's Consolidated Balance Sheet includes accounts payable, accrued expenses, uncertain tax positions and other liabilities that have been incurred and will ultimately be paid in cash; legal reserve accruals are not included in the table above. Also includes discretionary contributions in 2015 for Citi's non-U.S. pension plans and the non-U.S. postretirement plans, as well as employee benefit obligations accounted for under SFAS 87 (ASC 715), SFAS 106 (ASC 715) and SFAS 112 (ASC 712).


34



CAPITAL RESOURCES


Overview

Capital is used principally to support assets in Citi's businesses and to absorb credit, market and operational losses. Citi primarily generates capital through earnings from its operating businesses. Citi may augment its capital through issuances of common stock, noncumulative perpetual preferred stock and equity issued through awards under employee benefit plans, among other issuances. During 2014, Citi continued to raise capital through noncumulative perpetual preferred stock issuances amounting to approximately $3.7 billion, resulting in a total of approximately $10.5 billion outstanding as of December 31, 2014.

Further, Citi's capital levels may also be affected by changes in regulatory and accounting standards as well as the impact of future events on Citi's business results, such as corporate and asset dispositions.


Capital Management

Citigroup's capital management framework is designed to ensure that Citigroup and its principal subsidiaries maintain sufficient capital consistent with each entity's respective risk profile and all applicable regulatory standards and guidelines. Citi assesses its capital adequacy against a series of internal quantitative capital goals, designed to evaluate the Company's capital levels in expected and stressed economic environments. Underlying these internal quantitative capital goals are strategic capital considerations, centered on preserving and building financial strength. Senior management, with oversight from Citigroup's Board of Directors, is responsible for the capital assessment and planning process, which is integrated into Citi's capital plan. Implementation of the capital plan is carried out mainly through Citigroup's Asset and Liability Committee, with oversight from the Risk Management Committee of Citigroup's Board of Directors. Asset and liability committees are also established globally and for each significant legal entity, region, country and/or major line of business.


Current Regulatory Capital Standards


Overview

Citi is subject to regulatory capital standards issued by the Federal Reserve Board which, commencing with 2014, constitute the substantial adoption of the final U.S. Basel III rules (Final Basel III Rules), such as those governing the composition of regulatory capital (including the application of regulatory capital adjustments and deductions) and, initially for the second quarter of 2014 in conjunction with the granting of permission by the Federal Reserve Board to exit parallel reporting, approval to apply the Basel III Advanced Approaches framework in deriving risk-based capital ratios. Further, the Final Basel III Rules implement the "capital floor provision" of the so-called "Collins Amendment" of the Dodd-Frank Act, which requires Advanced Approaches banking organizations, such as Citi and Citibank, N.A., upon exiting parallel reporting, to calculate each of the three risk-based capital ratios (Common Equity Tier 1 Capital, Tier 1 Capital and Total Capital) under both the Standardized Approach starting on January 1, 2015 (or, for 2014, prior to the effective date of the Standardized Approach, the Basel I credit risk and Basel II.5 market risk capital rules, subsequently referred to in this section as the Basel III 2014 Standardized Approach) and the Advanced Approaches and publicly report (as well as measure compliance against) the lower of each of the resulting capital ratios.

Under the Final Basel III Rules, Citi, as with principally all U.S. banking organizations, is also required to maintain a minimum Tier 1 Leverage ratio of 4% commencing in 2014. The Tier 1 Leverage ratio, a non-risk-based measure of capital adequacy, is defined as Tier 1 Capital as a percentage of quarterly adjusted average total assets less amounts deducted from Tier 1 Capital.


Basel III Transition Arrangements

The Final Basel III Rules contain several differing, largely multi-year transition provisions (i.e., "phase-ins" and "phase-outs") with respect to the stated minimum Common Equity Tier 1 Capital and Tier 1 Capital ratio requirements, substantially all regulatory capital adjustments and deductions, non-qualifying Tier 1 and Tier 2 Capital instruments (such as non-grandfathered trust preferred securities and certain subordinated debt issuances), and the capital buffers. All of these transition provisions, with the exception of the phase-out of non-qualifying trust preferred securities from Tier 2 Capital, will be fully implemented by January 1, 2019 (full implementation).


35



The following chart sets forth the transitional progression to full implementation by January 1, 2019 of the regulatory capital components (i.e., inclusive of the mandatory 2.5% Capital Conservation Buffer and at least a 2% global systemically important bank holding company (GSIB) surcharge, but exclusive of the potential imposition of an additional Countercyclical Capital Buffer) comprising the effective minimum risk-based capital ratios.











Basel III Transition Arrangements: Minimum Risk-Based Capital Ratios


(1) The Final Basel III Rules do not address GSIBs. The transitional progression reflected in the chart above is consistent with the phase-in arrangement under the Basel Committee on Banking Supervision's (Basel Committee) GSIB rules, which would subject Citi to at least a 2% GSIB surcharge. In December 2014, however, the Federal Reserve Board issued a notice of proposed rulemaking which would impose risk-based capital surcharges upon U.S. bank holding companies that are identified as GSIBs, including Citi. As of December 31, 2014, Citi estimates its GSIB surcharge under the Federal Reserve Board's proposal would be 4%, compared to at least 2% under the Basel Committee requirements. For additional information regarding the Federal Reserve Board's proposed rule, see "Regulatory Capital Standards Developments" below.

















36




The following chart presents the transition arrangements (phase-in and phase-out) under the Final Basel III Rules for significant regulatory capital adjustments and deductions relative to Citi.


Basel III Transition Arrangements: Significant Regulatory Capital Adjustments and Deductions

January 1

2014

2015

2016

2017

2018

Phase-in of Significant Regulatory Capital Adjustments and Deductions

Common Equity Tier 1 Capital (1)

20

%

40

%

60

%

80

%

100

%

Common Equity Tier 1 Capital (2)

20

%

40

%

60

%

80

%

100

%

Additional Tier 1 Capital (2)(3)

80

%

60

%

40

%

20

%

0

%

100

%

100

%

100

%

100

%

100

%

Phase-out of Significant AOCI Regulatory Capital Adjustments

Common Equity Tier 1 Capital (4)

80

%

60

%

40

%

20

%

0

%

(1)

Includes the phase-in of Common Equity Tier 1 Capital deductions for all intangible assets other than goodwill and mortgage servicing rights (MSRs); and excess over 10%/15% limitations for deferred tax assets (DTAs) arising from temporary differences, significant common stock investments in unconsolidated financial institutions and MSRs. Goodwill (including goodwill "embedded" in the valuation of significant common stock investments in unconsolidated financial institutions) is fully deducted in arriving at Common Equity Tier 1 Capital commencing January 1, 2014. The amount of other intangible assets, aside from MSRs, not deducted in arriving at Common Equity Tier 1 Capital are risk-weighted at 100%, as are the excess over the 10%/15% limitations for DTAs arising from temporary differences, significant common stock investments in unconsolidated financial institutions and MSRs prior to full implementation of the Final Basel III Rules. Upon full implementation, the amount of temporary difference DTAs, significant common stock investments in unconsolidated financial institutions and MSRs not deducted in arriving at Common Equity Tier 1 Capital are risk-weighted at 250%.

(2)

Includes the phase-in of Common Equity Tier 1 Capital deductions related to DTAs arising from net operating loss, foreign tax credit and general business credit carry-forwards and defined benefit pension plan net assets; and the phase-in of the Common Equity Tier 1 Capital adjustment for cumulative unrealized net gains (losses) related to changes in fair value of financial liabilities attributable to Citi's own creditworthiness.

(3)

To the extent Additional Tier 1 Capital is not sufficient to absorb regulatory capital adjustments and deductions, such excess is to be applied against Common Equity Tier 1 Capital.

(4)

Includes the phase-out from Common Equity Tier 1 Capital of adjustments related to unrealized gains (losses) on available-for-sale (AFS) debt securities; unrealized gains on AFS equity securities; unrealized gains (losses) on held-to-maturity (HTM) securities included in AOCI; and defined benefit plans liability adjustment.

Citigroup's Capital Resources Under Current Regulatory Standards

During 2014, Citi was required to maintain stated minimum Common Equity Tier 1 Capital, Tier 1 Capital and Total Capital ratios of 4%, 5.5% and 8%, respectively. Furthermore, to be "well capitalized" under current federal bank regulatory agency definitions, a bank holding company must have a Tier 1 Capital ratio of at least 6%, a Total Capital ratio of at least 10%, and not be subject to a Federal Reserve Board directive to maintain higher capital levels.

The following table sets forth the capital tiers, risk-weighted assets, quarterly adjusted average total assets and capital ratios under current regulatory standards (reflecting Basel III Transition Arrangements) for Citi as of December 31, 2014 and December 31, 2013 .
























37




Citigroup Capital Components and Ratios Under Current Regulatory Standards (Basel III Transition Arrangements)

December 31, 2014

December 31, 2013 (1)

In millions of dollars, except ratios

Advanced Approaches

Standardized Approach (2)

Advanced Approaches

Standardized Approach (2)

Common Equity Tier 1 Capital

$

166,984


$

166,984


$

157,473


$

157,473


Tier 1 Capital

166,984


166,984


157,473


157,473


Total Capital (Tier 1 Capital + Tier 2 Capital) (3)

185,280


196,379


176,748


187,374


Risk-Weighted Assets

1,275,012


1,080,716


1,177,736


1,103,045


Quarterly Adjusted Average Total Assets (4)

1,849,297


1,849,297


1,830,896


1,830,896


Common Equity Tier 1 Capital ratio (5)

13.10

%

15.45

%

13.37

%

14.28

%

Tier 1 Capital ratio (5)

13.10


15.45


13.37


14.28


Total Capital ratio (5)

14.53


18.17


15.01


16.99


Tier 1 Leverage ratio

9.03


9.03


8.60


8.60



(1)

Pro forma presentation based on application of the Final Basel III Rules consistent with current period presentation.

(2)

Basel III 2014 Standardized Approach which reflects the application of the Basel I credit risk and Basel II.5 market risk capital rules.

(3)

Under the Advanced Approaches framework eligible credit reserves that exceed expected credit losses are eligible for inclusion in Tier 2 Capital to the extent the excess reserves do not exceed 0.6% of credit risk-weighted assets, which differs from the Standardized Approach in which the allowance for credit losses is includable in Tier 2 Capital up to 1.25% of credit risk-weighted assets, with any excess allowance for credit losses being deducted in arriving at credit risk-weighted assets.

(4)

Tier 1 Leverage ratio denominator.

(5)

As of December 31, 2014 and December 31, 2013 , Citi's reportable Common Equity Tier 1 Capital, Tier 1 Capital, and Total Capital ratios were the lower derived under the Basel III Advanced Approaches framework.

As indicated in the table above, Citigroup's capital ratios at December 31, 2014 were in excess of the stated minimum requirements under the Final Basel III Rules. In addition, Citi was also "well capitalized" under current federal bank regulatory agency definitions as of December 31, 2014 and December 31, 2013 .


38



Components of Citigroup Capital Under Current Regulatory Standards

(Basel III Advanced Approaches with Transition Arrangements)

In millions of dollars

December 31,
2014

December 31,

2013 (1)

Common Equity Tier 1 Capital

Citigroup common stockholders' equity (2)

$

200,190


$

197,694


Add: Qualifying noncontrolling interests

539


597


Regulatory Capital Adjustments and Deductions:

Less: Net unrealized gains (losses) on securities AFS, net of tax (3)(4)

46


(1,312)


Less: Defined benefit plans liability adjustment, net of tax (4)

(4,127)


(3,191)


Less: Accumulated net unrealized losses on cash flow hedges, net of tax (5)

(909)


(1,245)


Less: Cumulative unrealized net gain related to changes in fair value of financial liabilities

   attributable to own creditworthiness, net of tax (4)(6)

56


35


Less: Intangible assets:

   Goodwill, net of related deferred tax liabilities (DTLs) (7)

22,805


24,518


Identifiable intangible assets other than mortgage servicing rights (MSRs), net of related

   DTLs (4)

875


990


Less: Defined benefit pension plan net assets (4)

187


225


Less: Deferred tax assets (DTAs) arising from net operating loss, foreign tax credit and general

   business credit carry-forwards (4)(8)

4,726


5,288


Less: Excess over 10%/15% limitations for other DTAs, certain common stock investments,

  and MSRs (4)(8)(9)

2,003


2,343


Less: Deductions applied to Common Equity Tier 1 Capital due to insufficient amount of Additional
Tier 1 Capital to cover deductions (4)

8,083


13,167


Total Common Equity Tier 1 Capital

$

166,984


$

157,473


Additional Tier 1 Capital

Qualifying perpetual preferred stock (2)

$

10,344


$

6,645


Qualifying trust preferred securities (10)

1,719


2,616


Qualifying noncontrolling interests

7


8


Regulatory Capital Adjustment and Deductions:

Less: Cumulative unrealized net gain related to changes in fair value of financial liabilities

   attributable to own creditworthiness, net of tax (4)(6)

223


142


Less: Minimum regulatory capital requirements of insurance underwriting subsidiaries (11)

279


243


Less: Defined benefit pension plan net assets (4)

749


900


Less: DTAs arising from net operating loss, foreign tax credit and general

   business credit carry-forwards (4)(8)

18,902


21,151


Less: Deductions applied to Common Equity Tier 1 Capital due to insufficient amount of Additional

   Tier 1 Capital to cover deductions (4)

(8,083)


(13,167)


Total Additional Tier 1 Capital

$

-


$

-


Total Tier 1 Capital (Common Equity Tier 1 Capital + Additional Tier 1 Capital)

$

166,984


$

157,473


Tier 2 Capital

Qualifying subordinated debt (12)

$

17,386


$

16,594


Qualifying trust preferred securities (10)

-


1,242


Qualifying noncontrolling interests

12


13


Excess of eligible credit reserves over expected credit losses (13)

1,177


1,669


Regulatory Capital Deduction:

Less: Minimum regulatory capital requirements of insurance underwriting subsidiaries (11)

279


243


Total Tier 2 Capital

$

18,296


$

19,275


Total Capital (Tier 1 Capital + Tier 2 Capital)

$

185,280


$

176,748







39



Citigroup Risk-Weighted Assets (Basel III Advanced Approaches with Transition Arrangements)

In millions of dollars

December 31,
2014

December 31,

2013 (14)

Credit Risk (15)

$

862,031


$

834,082


Market Risk

100,481


112,154


Operational Risk (16)

312,500


231,500


Total Risk-Weighted Assets

$

1,275,012


$

1,177,736



(1)

Pro forma presentation of regulatory capital components and tiers based on application of the Final Basel III Rules consistent with current period presentation.

(2)

Issuance costs of $124 million and $93 million related to preferred stock outstanding at December 31, 2014 and December 31, 2013 , respectively, are excluded from common stockholders' equity and netted against preferred stock in accordance with Federal Reserve Board regulatory reporting requirements, which differ from those under U.S. GAAP.

(3)

In addition, includes the net amount of unamortized loss on held-to-maturity (HTM) securities. This amount relates to securities that were previously transferred from AFS to HTM, and non-credit related factors such as changes in interest rates and liquidity spreads for HTM securities with other-than-temporary impairment.

(4)

The transition arrangements for significant regulatory capital adjustments and deductions impacting Common Equity Tier 1 Capital and/or Additional Tier 1 Capital are set forth above in the table entitled "Basel III Transition Arrangements: Significant Regulatory Capital Adjustments and Deductions."

(5)

Common Equity Tier 1 Capital is adjusted for accumulated net unrealized gains (losses) on cash flow hedges included in AOCI that relate to the hedging of items not recognized at fair value on the balance sheet.

(6)

The cumulative impact of changes in Citigroup's own creditworthiness in valuing liabilities for which the fair value option has been elected and own-credit valuation adjustments on derivatives are excluded from Common Equity Tier 1 Capital, in accordance with the Final Basel III Rules.

(7)

Includes goodwill "embedded" in the valuation of significant common stock investments in unconsolidated financial institutions.

(8)

Of Citi's approximately $49.5 billion of net DTAs at December 31, 2014 , approximately $25.5 billion of such assets were includable in regulatory capital pursuant to the Final Basel III Rules, while approximately $24.0 billion of such assets were excluded in arriving at regulatory capital. Comprising the excluded net DTAs was an aggregate of approximately $25.6 billion of net DTAs arising from net operating loss, foreign tax credit and general business credit carry-forwards as well as temporary differences, of which $14.4 billion were deducted from Common Equity Tier 1 Capital and $11.2 billion were deducted from Additional Tier 1 Capital. In addition, approximately $1.6 billion of net DTLs, primarily consisting of DTLs associated with goodwill and certain other intangible assets, partially offset by DTAs related to cash flow hedges, are permitted to be excluded prior to deriving the amount of net DTAs subject to deduction under these rules. Separately, under the Final Basel III Rules, goodwill and these other intangible assets are deducted net of associated DTLs in arriving at Common Equity Tier 1 Capital, while Citi's current cash flow hedges and the related deferred tax effects are not required to be reflected in regulatory capital.

(9)

Aside from MSRs, reflects DTAs arising from temporary differences and significant common stock investments in unconsolidated financial institutions.

(10)

Represents Citigroup Capital XIII trust preferred securities, which are permanently grandfathered as Tier 1 Capital under the Final Basel III Rules, as well as 50% of non-grandfathered trust preferred securities. The remaining 50% of non-grandfathered trust preferred securities are eligible for inclusion in Tier 2 Capital during 2014 in accordance with the transition arrangements for non-qualifying capital instruments under the Final Basel III Rules.

(11)

50% of the minimum regulatory capital requirements of insurance underwriting subsidiaries must be deducted from each of Tier 1 Capital and Tier 2 Capital.

(12)

Under the transition arrangements of the Final Basel III Rules, non-qualifying subordinated debt issuances which consist of those with a fixed-to-floating rate step-up feature where the call/step-up date has not passed are eligible for 50% inclusion in Tier 2 Capital during 2014, with the threshold based upon the aggregate outstanding principal amounts of such issuances as of January 1, 2014.

(13)

Advanced Approaches banking organizations are permitted to include in Tier 2 Capital eligible credit reserves that exceed expected credit losses to the extent that the excess reserves do not exceed 0.6% of credit risk-weighted assets.

(14)

Risk-weighted assets at December 31, 2013 are presented on a pro forma basis, assuming the application of the Final Basel III Rules consistent with current period presentation, including the resultant impact on credit risk-weighted assets.

(15)

Under the Final Basel III Rules, credit risk-weighted assets during the transition period reflect the effects of transitional arrangements related to regulatory capital adjustments and deductions and, as a result, will differ from credit risk-weighted assets derived under full implementation of the rules.

(16)

During 2014, Citi's operational risk-weighted assets were increased by $81 billion, of which $56 billion was in conjunction with the granting of permission by the Federal Reserve Board to exit the parallel run period and commence applying the Basel III Advanced Approaches framework, effective with the second quarter of 2014. Further, an additional $25 billion was recognized during the last six months of 2014, reflecting an evaluation of ongoing events in the banking industry.




40



Citigroup Capital Rollforward Under Current Regulatory Standards

(Basel III Advanced Approaches with Transition Arrangements)

In millions of dollars

Three Months Ended 
 December 31, 2014

Twelve Months Ended 
 December 31, 2014

Common Equity Tier 1 Capital

Balance, beginning of period (1)

$

166,425


$

157,473


Net income

350


7,313


Dividends declared

(190

)

(633

)

Net increase in treasury stock

(380

)

(1,232

)

Net increase in additional paid-in capital (2)

229


778


Net increase in foreign currency translation adjustment net of hedges, net of tax

(2,716

)

(4,946

)

Net decrease in unrealized losses on securities AFS, net of tax (3)

94


339


Net increase in defined benefit plans liability adjustment, net of tax (3)

(213

)

(234

)

Net increase in cumulative unrealized net gain related to changes in fair value of

    financial liabilities attributable to own creditworthiness, net of tax

(17

)

(21

)

Net decrease in goodwill, net of related deferred tax liabilities (DTLs)

873


1,713


Net change in other intangible assets other than mortgage servicing rights (MSRs),

    net of related DTLs

(14

)

115


Net decrease in defined benefit pension plan net assets

49


38


Net decrease in deferred tax assets (DTAs) arising from net operating loss, foreign

    tax credit and general business credit carry-forwards

205


562


Net change in excess over 10%/15% limitations for other DTAs, certain common stock

    investments and MSRs

(88

)

340


Net decrease in regulatory capital deduction applied to Common Equity Tier 1 Capital

    due to insufficient Additional Tier 1 Capital to cover deductions

2,402


5,084


Other

(25

)

295


Net increase in Common Equity Tier 1 Capital

$

559


$

9,511


Common Equity Tier 1 Capital Balance, end of period

$

166,984


$

166,984


Additional Tier 1 Capital

Balance, beginning of period (1)

$

-


$

-


Net increase in qualifying perpetual preferred stock (4)

1,493


3,699


Net decrease in qualifying trust preferred securities

(7

)

(897

)

Net increase in cumulative unrealized net gain related to changes in fair value of

    financial liabilities attributable to own creditworthiness, net of tax

(69

)

(81

)

Net decrease in defined benefit pension plan net assets

194


151


Net decrease in DTAs arising from net operating loss, foreign tax credit and general

    business credit carry-forwards

822


2,249


Net decrease in regulatory capital deduction applied to Common Equity Tier 1 Capital

    due to insufficient Additional Tier 1 Capital to cover deductions

(2,402

)

(5,084

)

Other

(31

)

(37

)

Net change in Additional Tier 1 Capital

$

-


$

-


Tier 1 Capital Balance, end of period

$

166,984


$

166,984


Tier 2 Capital

Balance, beginning of period (1)

$

18,382


$

19,275


Net increase in qualifying subordinated debt

401


792


Net decrease in qualifying trust preferred securities

-


(1,242

)

Net decrease in excess of eligible credit reserves over expected credit losses

(456

)

(492

)

Other

(31

)

(37

)

Net decrease in Tier 2 Capital

$

(86

)

$

(979

)

Tier 2 Capital Balance, end of period

$

18,296


$

18,296


Total Capital (Tier 1 Capital + Tier 2 Capital)

$

185,280


$

185,280





41



(1)

Pro forma presentation based on application of the Final Basel III Rules consistent with current period presentation.

(2)

Primarily represents an increase in additional paid-in capital related to employee benefit plans.

(3)

Presented net of impact of transition arrangements related to unrealized losses on securities AFS and defined benefit plans liability adjustment under the Final Basel III Rules.

(4)

Citi issued approximately $3.7 billion and approximately $1.5 billion of qualifying perpetual preferred stock during the twelve months and three months ended December 31, 2014 , respectively, which were partially offset by the netting of issuance costs of $31 million and $7 million during those periods.


Citigroup Risk-Weighted Assets Rollforward (Basel III Advanced Approaches with Transition Arrangements)

In millions of dollars

Three Months Ended 
 December 31, 2014

Twelve Months Ended 
December 31, 2014
(1)

 Total Risk-Weighted Assets, beginning of period

$

1,282,986


$

1,103,045


Impact of adoption of Basel III Advanced Approaches (2)

-


74,691


Changes in Credit Risk-Weighted Assets

Net change in retail exposures (3)

5,222


(29,820

)

Net change in wholesale exposures (4)

(9,316

)

31,698


Net change in repo-style transactions

(444

)

4,483


Net change in securitization exposures

(166

)

2,470


Net decrease in equity exposures

(893

)

(1,605

)

Net change in over-the-counter (OTC) derivatives (5)

(10,158

)

9,148


Net increase in derivatives CVA

1,834


4,544


Net change in other (6)

(5,004

)

5,706


Net change in supervisory 6% multiplier (7)

(1,245

)

1,325


Net change in Credit Risk-Weighted Assets

$

(20,170

)

$

27,949


Changes in Market Risk-Weighted Assets

Net change in risk levels (8)

$

650


$

(17,803

)

Net change due to model and methodology updates

(954

)

6,130


Net decrease in Market Risk-Weighted Assets

$

(304

)

$

(11,673

)

Net increase in Operational Risk-Weighted Assets (9)

$

12,500


$

81,000


Total Risk-Weighted Assets, end of period

$

1,275,012


$

1,275,012



(1)

Total risk-weighted assets at the beginning of the period (i.e., as of December 31, 2013) are presented on a pro forma basis to reflect application of the Final Basel III Rules related to the effect of transition arrangements on regulatory capital components, consistent with current period presentation.

(2) Reflects the effect of adjusting credit risk-weighted assets at the beginning of the period from a Basel I basis to a Basel III Advanced Approaches basis; adjusting market risk-weighted assets from a Basel II.5 basis to a Basel III Advanced Approach basis; and including operational risk-weighted assets as required under the Basel III Advanced Approaches rules.

(3)

Retail exposures decreased from year-end 2013, driven by reduction in loans and commitments, sale of consumer businesses in Spain and Greece and the impact of FX translation, offset by enhancements to credit risk models.

(4)

Wholesale exposures decreased from September 30, 2014, driven by model parameter updates and reductions in loans and commitments. The increase from year-end 2013 was driven by enhancements to credit risk models.

(5)

OTC derivatives decreased from September 30, 2014, driven by model parameter updates. The increase from year-end 2013 was largely due to enhancements to credit risk models, partially offset by model parameter updates.

(6)

Other includes cleared transactions, unsettled transactions, assets other than those reportable in specific exposure categories and non-material portfolios of exposures.

(7)

Supervisory 6% multiplier does not apply to derivatives CVA.

(8)

Market risk-weighted assets risk levels decreased from year-end 2013 driven by movement in securitization positions from trading book to banking book, as well as reductions in inventory positions.

(9) During the first quarter of 2014, Citi increased operational risk-weighted assets by $56 billion in conjunction with the granting of permission by the Federal Reserve Board to exit the parallel run period and commence applying the Basel III Advanced Approaches framework, effective with the second quarter of 2014 . Citi's operational risk-weighted assets were further increased by $12.5 billion during each of the third and fourth quarters of 2014, reflecting an evaluation of ongoing events in the banking industry.


Capital Resources of Citigroup's Subsidiary U.S. Depository Institutions Under Current Regulatory Standards

Citigroup's subsidiary U.S. depository institutions are also subject to regulatory capital standards issued by their respective primary federal bank regulatory agencies, which are similar to the standards of the Federal Reserve Board.

The following table sets forth the capital tiers, risk-weighted assets, quarterly adjusted average total assets and capital ratios under current regulatory standards (reflecting Basel III Transition Arrangements) for Citibank, N.A., Citi's primary subsidiary U.S. depository institution, as of December 31, 2014 and December 31, 2013 .


42



Citibank, N.A. Capital Components and Ratios Under Current Regulatory Standards (Basel III Transition Arrangements)

December 31, 2014

December 31, 2013 (1)

In millions of dollars, except ratios

Advanced Approaches

Standardized Approach (2)

Advanced Approaches

Standardized Approach (2)

Common Equity Tier 1 Capital

$

129,135


$

129,135


$

128,317


$

128,317


Tier 1 Capital

129,135


129,135


128,317


128,317


Total Capital (Tier 1 Capital + Tier 2 Capital) (3)

140,119


150,215


137,277


146,267


Risk-Weighted Assets

946,333


906,250


893,390


910,553


Quarterly Adjusted Average Total Assets (4)

1,367,444


1,367,444


1,321,440


1,321,440


Common Equity Tier 1 Capital ratio (5)

13.65

%

14.25

%

14.36

%

14.09

%

Tier 1 Capital ratio (5)

13.65


14.25


14.36


14.09


Total Capital ratio (5)

14.81


16.58


15.37


16.06


Tier 1 Leverage ratio

9.44


9.44


9.71


9.71



(1)

Pro forma presentation based on application of the Final Basel III Rules consistent with current period presentation.

(2)

Basel III 2014 Standardized Approach which reflects the application of the Basel I credit risk and Basel II.5 market risk capital rules.

(3)

Under the Advanced Approaches framework eligible credit reserves that exceed expected credit losses are eligible for inclusion in Tier 2 Capital to the extent the excess reserves do not exceed 0.6% of credit risk-weighted assets, which differs from the Standardized Approach in which the allowance for credit losses is includable in Tier 2 Capital up to 1.25% of credit risk-weighted assets, with any excess allowance for credit losses being deducted in arriving at credit risk-weighted assets.

(4)

Tier 1 Leverage ratio denominator.

(5)

As of December 31, 2014 , Citibank, N.A.'s reportable Common Equity Tier 1 Capital, Tier 1 Capital, and Total Capital ratios were the lower derived under the Basel III Advanced Approaches. As of December 31, 2013 , Citibank, N.A.'s reportable Common Equity Tier 1 Capital and Tier 1 Capital ratios were the lower derived under the Basel III 2014 Standardized Approach (Basel I credit risk and Basel II.5 market risk capital rules), whereas the reportable Total Capital ratio was the lower derived under the Advanced Approaches framework.

Impact of Changes on Citigroup and Citibank, N.A. Capital Ratios Under Current Regulatory Capital Standards

The following table presents the estimated sensitivity of Citigroup's and Citibank, N.A.'s capital ratios to changes of $100 million in Common Equity Tier 1 Capital, Tier 1 Capital and Total Capital (numerator), and changes of $1 billion in Advanced Approaches and Standardized Approach risk-weighted assets as well as quarterly adjusted average total assets (denominator), under current regulatory

capital standards (reflecting Basel III Transition Arrangements), as of December 31, 2014 . This information is provided for the purpose of analyzing the impact that a change in Citigroup's or Citibank, N.A.'s financial position or results of operations could have on these ratios. These sensitivities only consider a single change to either a component of capital, risk-weighted assets, or quarterly adjusted average total assets. Accordingly, an event that affects more than one factor may have a larger basis point impact than is reflected in this table.


Common Equity

Tier 1 Capital ratio

Tier 1 Capital ratio

Total Capital ratio

Tier 1 Leverage ratio

Impact of

$100 million

change in

Common Equity

Tier 1 Capital

Impact of

$1 billion

change in risk-

weighted assets

Impact of

$100 million

change in

Tier 1

Capital

Impact of

$1 billion

change in risk-

weighted assets

Impact of

$100 million

change in

Total

Capital

Impact of

$1 billion

change in risk-

weighted assets

Impact of

$100 million

change in

Tier 1

Capital

Impact of

$1 billion

change in

 quarterly adjusted

average total

assets

Citigroup

Advanced Approaches

0.8 bps

1.0 bps

0.8 bps

1.0 bps

0.8 bps

1.1 bps

0.5 bps

0.5 bps

Standardized Approach (1)

0.9 bps

1.4 bps

0.9 bps

1.4 bps

0.9 bps

1.7 bps

0.5 bps

0.5 bps

Citibank, N.A.

Advanced Approaches

1.1 bps

1.4 bps

1.1 bps

1.4 bps

1.1 bps

1.6 bps

0.7 bps

0.7 bps

Standardized Approach (1)

1.1 bps

1.6 bps

1.1 bps

1.6 bps

1.1 bps

1.8 bps

0.7 bps

0.7 bps


(1) Basel III 2014 Standardized Approach which reflects the application of the Basel I credit risk and Basel II.5 market risk capital rules.


43



Citigroup Broker-Dealer Subsidiaries

At December 31, 2014 , Citigroup Global Markets Inc., a U.S. broker-dealer registered with the SEC that is an indirect wholly owned subsidiary of Citigroup, had net capital, computed in accordance with the SEC's net capital rule, of $5.5 billion, which exceeded the minimum requirement by $4.4 billion.

In addition, certain of Citi's other broker-dealer subsidiaries are subject to regulation in the countries in which they do business, including requirements to maintain specified levels of net capital or its equivalent. Citigroup's other broker-dealer subsidiaries were in compliance with their capital requirements at December 31, 2014 .










Basel III (Full Implementation)


Citigroup's Capital Resources Under Basel III (Full Implementation)

Citi currently anticipates that its effective minimum Common Equity Tier 1 Capital, Tier 1 Capital and Total Capital ratio requirements under the Final Basel III Rules, on a fully implemented basis, will be at least 9%, 10.5% and 12.5%, respectively. However, Citi's effective minimum ratio requirements will be higher if the Federal Reserve Board's GSIB surcharge rule were to be adopted as proposed.

Further, under the Final Basel III Rules, Citi must also comply with a 4% minimum Tier 1 Leverage ratio requirement and an effective 5% minimum Supplementary Leverage ratio requirement.

The following table sets forth the capital tiers, risk-weighted assets, quarterly adjusted average total assets and capital ratios under the Final Basel III Rules for Citi, assuming full implementation, as of December 31, 2014 and December 31, 2013 .


Citigroup Capital Components and Ratios Under Basel III (Full Implementation)

December 31, 2014

December 31, 2013

In millions of dollars, except ratios

Advanced Approaches

Standardized Approach (1)

Advanced Approaches

Standardized Approach (1)

Common Equity Tier 1 Capital

$

136,806


$

136,806


$

125,597


$

125,597


Tier 1 Capital

148,275


148,275


133,412


133,412


Total Capital (Tier 1 Capital + Tier 2 Capital) (2)

165,663


178,625


150,049


161,782


Risk-Weighted Assets

1,292,878


1,228,748


1,185,766


1,176,886


Quarterly Adjusted Average Total Assets (3)

1,835,497


1,835,497


1,814,368


1,814,368


Common Equity Tier 1 Capital ratio (4)(5)

10.58

%

11.13

%

10.59

%

10.67

%

Tier 1 Capital ratio (4)(5)

11.47


12.07


11.25


11.34


Total Capital ratio (4)(5)

12.81


14.54


12.65


13.75


Tier 1 Leverage ratio (5)

8.08


8.08


7.35


7.35



(1) Common Equity Tier 1 Capital, Tier 1 Capital, and Total Capital ratios as well as related components reflect application of the Basel III Standardized Approach framework effective January 1, 2015.

(2)

Under the Advanced Approaches framework eligible credit reserves that exceed expected credit losses are eligible for inclusion in Tier 2 Capital to the extent the excess reserves do not exceed 0.6% of credit risk-weighted assets, which differs from the Standardized Approach in which the allowance for credit losses is includable in Tier 2 Capital up to 1.25% of credit risk-weighted assets, with any excess allowance for credit losses being deducted in arriving at credit risk-weighted assets.

(3) Tier 1 Leverage ratio denominator.

(4) As of December 31, 2014 and December 31, 2013 , Citi's Common Equity Tier 1 Capital, Tier 1 Capital, and Total Capital ratios were the lower derived under the Basel III Advanced Approaches framework.

(5) Citi's Basel III capital ratios and certain related components are non-GAAP financial measures. Citi believes these ratios and their related components provide useful information to investors and others by measuring Citi's progress against future regulatory capital standards.



Common Equity Tier 1 Capital Ratio

Citi's Common Equity Tier 1 Capital ratio was 10.6% at December 31, 2014, unchanged from that estimated as of December 31, 2013 (both based on application of the Advanced Approaches for determining total risk-weighted assets). The ratio remained stable year-over-year as the growth in Common Equity Tier 1 Capital largely reflecting net income of $7.3 billion and the favorable effects attributable to DTA utilization of approximately $3.3



billion, was offset by a decline in Accumulated other comprehensive income (loss) , and higher credit and operational risk-weighted assets.







44



Components of Citigroup Capital Under Basel III (Advanced Approaches with Full Implementation)

In millions of dollars

December 31,
2014

December 31, 2013

Common Equity Tier 1 Capital

Citigroup common stockholders' equity (1)

$

200,190


$

197,694


Add: Qualifying noncontrolling interests

165


182


Regulatory Capital Adjustments and Deductions:

Less: Accumulated net unrealized losses on cash flow hedges, net of tax (2)

(909

)

(1,245

)

Less: Cumulative unrealized net gain related to changes in fair value of financial liabilities

   attributable to own creditworthiness, net of tax (3)

279


177


Less: Intangible assets:

  Goodwill, net of related deferred tax liabilities (DTLs) (4)

22,805


24,518


Identifiable intangible assets other than mortgage servicing rights (MSRs), net of related DTLs

4,373


4,950


Less: Defined benefit pension plan net assets

936


1,125


Less: Deferred tax assets (DTAs) arising from net operating loss, foreign tax credit and general

   business credit carry-forwards (5)

23,628


26,439


Less: Excess over 10%/15% limitations for other DTAs, certain common stock investments,

  and MSRs (5)(6)

12,437


16,315


Total Common Equity Tier 1 Capital

$

136,806


$

125,597


Additional Tier 1 Capital

Qualifying perpetual preferred stock (1)

$

10,344


$

6,645


Qualifying trust preferred securities (7)

1,369


1,374


Qualifying noncontrolling interests

35


39


Regulatory Capital Deduction:

Less: Minimum regulatory capital requirements of insurance underwriting subsidiaries (8)

279


243


Total Additional Tier 1 Capital

$

11,469


$

7,815


Total Tier 1 Capital (Common Equity Tier 1 Capital + Additional Tier 1 Capital)

$

148,275


$

133,412


Tier 2 Capital

Qualifying subordinated debt (9)

$

16,094


$

14,414


Qualifying trust preferred securities (10)

350


745


Qualifying noncontrolling interests

46


52


Excess of eligible credit reserves over expected credit losses (11)

1,177


1,669


Regulatory Capital Deduction:

Less: Minimum regulatory capital requirements of insurance underwriting subsidiaries (8)

279


243


Total Tier 2 Capital

$

17,388


$

16,637


Total Capital (Tier 1 Capital + Tier 2 Capital)  (12)

$

165,663


$

150,049



(1)

Issuance costs of $124 million and $93 million related to preferred stock outstanding at December 31, 2014 and December 31, 2013 , respectively, are excluded from common stockholders' equity and netted against preferred stock in accordance with Federal Reserve Board regulatory reporting requirements, which differ from those under U.S. GAAP.

(2)

Common Equity Tier 1 Capital is adjusted for accumulated net unrealized gains (losses) on cash flow hedges included in AOCI that relate to the hedging of items not recognized at fair value on the balance sheet.

(3)

The cumulative impact of changes in Citigroup's own creditworthiness in valuing liabilities for which the fair value option has been elected and own-credit valuation adjustments on derivatives are excluded from Common Equity Tier 1 Capital, in accordance with the Final Basel III Rules.

(4)

Includes goodwill "embedded" in the valuation of significant common stock investments in unconsolidated financial institutions.

(5)

Of Citi's approximately $49.5 billion of net DTAs at December 31, 2014 , approximately $15.2 billion of such assets were includable in regulatory capital pursuant to the Final Basel III Rules, while approximately $34.3 billion of such assets were excluded in arriving at Common Equity Tier 1 Capital. Comprising the excluded net DTAs was an aggregate of approximately $35.9 billion of net DTAs arising from net operating loss, foreign tax credit and general business credit carry-forwards as well as temporary differences that were deducted from Common Equity Tier 1 Capital. In addition, approximately $1.6 billion of net DTLs, primarily consisting of DTLs associated with goodwill and certain other intangible assets, partially offset by DTAs related to cash flow hedges, are permitted to be excluded prior to deriving the amount of net DTAs subject to deduction under these rules. Separately, under the Final Basel III Rules, goodwill and these other intangible assets are deducted net of associated DTLs in arriving at Common Equity Tier 1 Capital, while Citi's current cash flow hedges and the related deferred tax effects are not required to be reflected in regulatory capital.

(6)

Aside from MSRs, reflects DTAs arising from temporary differences and significant common stock investments in unconsolidated financial institutions.

(7)

Represents Citigroup Capital XIII trust preferred securities, which are permanently grandfathered as Tier 1 Capital under the Final Basel III Rules.

(8)

50% of the minimum regulatory capital requirements of insurance underwriting subsidiaries must be deducted from each of Tier 1 Capital and Tier 2 Capital.


45



(9)

Non-qualifying subordinated debt issuances which consist of those with a fixed-to-floating rate step-up feature where the call/step-up date has not passed are excluded from Tier 2 Capital.

(10)

Represents the amount of non-grandfathered trust preferred securities eligible for inclusion in Tier 2 Capital under the Final Basel III Rules, which will be fully phased-out of Tier 2 Capital by January 1, 2022.

(11)

Advanced Approaches banking organizations are permitted to include in Tier 2 Capital eligible credit reserves that exceed expected credit losses to the extent that the excess reserves do not exceed 0.6% of credit risk-weighted assets.

(12)

Total Capital as calculated under Advanced Approaches, which differs from the Standardized Approach in the treatment of the amount of eligible credit reserves includable in Tier 2 Capital.


Citigroup Capital Rollforward Under Basel III (Advanced Approaches with Full Implementation)

In millions of dollars

Three Months Ended 
 December 31, 2014

Twelve Months Ended 
 December 31, 2014

Common Equity Tier 1 Capital

Balance, beginning of period

$

138,762


$

125,597


Net income

350


7,313


Dividends declared

(190

)

(633

)

Net increase in treasury stock

(380

)

(1,232

)

Net increase in additional paid-in capital (1)

229


778


Net increase in foreign currency translation adjustment net of hedges, net of tax

(2,716

)

(4,946

)

Net decrease in unrealized losses on securities AFS, net of tax

470


1,697


Net increase in defined benefit plans liability adjustment, net of tax

(1,064

)

(1,170

)

Net increase in cumulative unrealized net gain related to changes in fair value of financial liabilities attributable to own creditworthiness, net of tax

(86

)

(102

)

Net decrease in goodwill, net of related deferred tax liabilities (DTLs)

873


1,713


Net change in other intangible assets other than mortgage servicing rights (MSRs),

   net of related DTLs

(66

)

577


Net decrease in defined benefit pension plan net assets

243


189


Net decrease in deferred tax assets (DTAs) arising from net operating loss, foreign

    tax credit and general business credit carry-forwards

1,027


2,811


Net change in excess over 10%/15% limitations for other DTAs, certain common stock

   investments and MSRs

(639

)

3,878


Other

(7

)

336


Net change in Common Equity Tier 1 Capital

$

(1,956

)

$

11,209


Common Equity Tier 1 Capital Balance, end of period

$

136,806


$

136,806


Additional Tier 1 Capital

Balance, beginning of period

$

10,010


$

7,815


Net increase in qualifying perpetual preferred stock (2)

1,493


3,699


Net decrease in qualifying trust preferred securities

(1

)

(5

)

Other

(33

)

(40

)

Net increase in Additional Tier 1 Capital

$

1,459


$

3,654


Tier 1 Capital Balance, end of period

$

148,275


$

148,275


Tier 2 Capital

Balance, beginning of period

$

17,482


$

16,637


Net increase in qualifying subordinated debt

401


1,680


Net decrease in excess of eligible credit reserves over expected credit losses

(456

)

(492

)

Other

(39

)

(437

)

Net change in Tier 2 Capital

$

(94

)

$

751


Tier 2 Capital Balance, end of period

$

17,388


$

17,388


Total Capital (Tier 1 Capital + Tier 2 Capital)

$

165,663


$

165,663



(1)

Primarily represents an increase in additional paid-in capital related to employee benefit plans.

(2)

Citi issued approximately $3.7 billion and approximately $1.5 billion of qualifying perpetual preferred stock during the twelve months and three months ended December 31, 2014 , respectively, which were partially offset by the netting of issuance costs of $31 million and $7 million for those periods.


46



Citigroup Risk-Weighted Assets Under Basel III (Full Implementation) at December 31, 2014 (1)

Advanced Approaches

Standardized Approach

In millions of dollars

Citicorp

Citi Holdings

Total

Citicorp

Citi Holdings

Total

Credit Risk

$

760,690


$

119,207


$

879,897


$

1,033,064


$

95,203


$

1,128,267


Market Risk

95,835


4,646


100,481


95,835


4,646


100,481


Operational Risk (2)

258,693


53,807


312,500


-


-


-


Total Risk-Weighted Assets

$

1,115,218


$

177,660


$

1,292,878


$

1,128,899


$

99,849


$

1,228,748



Citigroup Risk-Weighted Assets Under Basel III (Full Implementation) at December 31, 2013 (1)

Advanced Approaches

Standardized Approach

In millions of dollars

Citicorp

Citi Holdings

Total

Citicorp

Citi Holdings

Total

Credit Risk

$

693,469


$

148,644


$

842,113


$

962,456


$

102,277


$

1,064,733


Market Risk

106,919


5,234


112,153


106,919


5,234


112,153


Operational Risk

159,500


72,000


231,500


-


-


-


Total Risk-Weighted Assets

$

959,888


$

225,878


$

1,185,766


$

1,069,375


$

107,511


$

1,176,886



(1)

Calculated based on the Final Basel III Rules.

(2)

During 2014, Citi's operational risk-weighted assets were increased by $81 billion, of which $56 billion was in conjunction with the granting of permission by the Federal Reserve Board to exit the parallel run period and commence applying the Basel III Advanced Approaches framework, effective with the second quarter of 2014. Further, an additional $25 billion was recognized during the last six months of 2014, reflecting an evaluation of ongoing events in the banking industry.


Total risk-weighted assets under the Basel III Advanced Approaches increased from year-end 2013 largely due to the previously mentioned increases in operational risk-weighted assets throughout 2014 as well as enhancements to Citi's credit risk models, partially offset by model parameter updates, the impact of FX translation and the ongoing decline in Citi Holdings assets.

Total risk-weighted assets under the Basel III Standardized Approach increased during 2014 substantially due to an increase in credit risk-weighted assets attributable to an increase in derivative exposures and corporate lending products within the ICG businesses, partially offset by the ongoing decline in Citi Holdings assets.








































47



Citigroup Risk-Weighted Assets Rollforward (Basel III Advanced Approaches with Full Implementation)

In millions of dollars

Three Months Ended 
 December 31, 2014
(1)

Twelve Months Ended 
 December 31, 2014
(1)

 Total Risk-Weighted Assets, beginning of period

$

1,301,958


$

1,185,766


Changes in Credit Risk-Weighted Assets

Net change in retail exposures (2)

5,222


(29,820

)

Net change in wholesale exposures (3)

(9,316

)

31,698


Net change in repo-style transactions

(444

)

4,483


Net change in securitization exposures

(166

)

2,470


Net decrease in equity exposures

(770

)

(1,681

)

Net change in over-the-counter (OTC) derivatives (4)

(10,158

)

9,148


Net increase in derivatives CVA

1,834


4,544


Net change in other (5)

(6,170

)

12,638


Net change in supervisory 6% multiplier (6)

(1,308

)

4,305


Net change in Credit Risk-Weighted Assets

$

(21,276

)

$

37,785


Changes in Market Risk-Weighted Assets

Net change in risk levels (7)

$

650


$

(17,803

)

Net change due to model and methodology updates

(954

)

6,130


Net decrease in Market Risk-Weighted Assets

$

(304

)

$

(11,673

)

Net increase in Operational Risk-Weighted Assets (8)

$

12,500


$

81,000


Total Risk-Weighted Assets, end of period

$

1,292,878


$

1,292,878



(1)

Calculated based on the Final Basel III Rules.

(2)

Retail exposures decreased from year-end 2013, driven by reduction in loans and commitments, the sales of consumer businesses in Spain and Greece and the impact of FX translation, offset by enhancements to credit risk models.

(3)

Wholesale exposures decreased from September 30, 2014, driven by model parameter updates and reductions in loan and commitments. The increase from year-end 2013 was driven by enhancements to credit risk models.

(4)

OTC derivatives decreased from September 30, 2014, driven by model parameter updates. The increase from year-end 2013 was largely due to enhancements to credit risk models, partially offset by model parameter updates.

(5) Other includes cleared transactions, unsettled transactions, assets other than those reportable in specific exposure categories and non-material portfolios of exposures.

(6)

Supervisory 6% multiplier does not apply to derivatives CVA.

(7)

Market risk-weighted assets risk levels decreased from year-end 2013 driven by movement in securitization positions from trading book to banking book, as well as reductions in inventory positions.

(8) During the first quarter of 2014, Citi increased operational risk-weighted assets by approximately $56 billion in conjunction with the granting of permission by the Federal Reserve Board to exit the parallel run period and commence applying the Basel III Advanced Approaches framework, effective with the second quarter of 2014 . Citi's operational risk-weighted assets were further increased by $12.5 billion during each of the third and fourth quarters of 2014, reflecting an evaluation of ongoing events in the banking industry.


Supplementary Leverage Ratio

Under the Final Basel III Rules, Advanced Approaches banking organizations, including Citi and Citibank, N.A., are also required to calculate a Supplementary Leverage ratio, which significantly differs from the Tier 1 Leverage ratio by also including certain off-balance sheet exposures within the denominator of the ratio (Total Leverage Exposure).

In September 2014, the U.S. banking agencies adopted revisions to the Final Basel III Rules (Revised Final Basel III Rules) with respect to the definition of Total Leverage Exposure as well as the frequency with which certain components of the Supplementary Leverage ratio are calculated. As revised, the Supplementary Leverage ratio represents end of period Tier 1 Capital to Total Leverage Exposure, with the latter defined as the sum of the daily average of on-balance sheet assets for the quarter and the average of certain off-balance sheet exposures calculated as of the last day of each month in the quarter, less applicable Tier 1 Capital deductions.

Under the Revised Final Basel III Rules, the definition of Total Leverage Exposure has been modified from that of the Final Basel III Rules in certain respects, such as by permitting limited netting of repo-style transactions (i.e., qualifying repurchase or reverse repurchase and securities borrowing or lending transactions) with the same counterparty and allowing for the application of cash variation margin to reduce derivative exposures, both of which are subject to certain specific conditions, as well as by distinguishing and expanding the measure of exposure for written credit derivatives. Moreover, the credit conversion factors (CCF) to be applied to certain off-balance sheet exposures have been conformed to those under the Basel III Standardized Approach for determining credit risk-weighted assets, with the exception of the imposition of a 10% CCF floor.

Consistent with the Final Basel III Rules, Advanced Approaches banking organizations will be required to disclose the Supplementary Leverage ratio commencing January 1, 2015. Further, U.S. GSIBs and their subsidiary


48



insured depository institutions, including Citi and Citibank, N.A., will be subject to enhanced Supplementary Leverage ratio standards. The enhanced Supplementary Leverage ratio standards establish a 2% leverage buffer for U.S. GSIBs in addition to the stated 3% minimum Supplementary Leverage ratio requirement in the Final Basel III Rules. If a U.S. GSIB failed to exceed the 2% leverage buffer, it would be subject to increasingly onerous restrictions (depending upon the extent of the shortfall) regarding capital distributions and discretionary executive bonus payments. Accordingly, U.S. GSIBs are effectively subject to a 5% minimum Supplementary Leverage ratio requirement. Additionally, the final rule requires that

insured depository institution subsidiaries of U.S. GSIBs, including Citibank, N.A., maintain a Supplementary Leverage ratio of 6% to be considered "well capitalized" under the revised prompt corrective action framework established by the Final Basel III Rules. Citi and Citibank, N.A. are required to be compliant with these higher effective minimum ratio requirements on January 1, 2018.

The following table sets forth Citi's estimated Basel III Supplementary Leverage ratio and related components, under the Revised Final Basel III Rules, for the three months ended December 31, 2014 and December 31, 2013.




Citigroup Estimated Basel III Supplementary Leverage Ratios and Related Components (1)

In millions of dollars, except ratios

December 31, 2014

December 31, 2013 (2)

Tier 1 Capital

$

148,275


$

133,412


Total Leverage Exposure (TLE)

On-balance sheet assets (3)

$

1,899,955


$

1,886,613


Certain off-balance sheet exposures: (4)

   Potential future exposure (PFE) on derivative contracts

240,712


240,534


   Effective notional of sold credit derivatives, net (5)

96,869


102,061


   Counterparty credit risk for repo-style transactions (6)

21,894


26,035


   Unconditionally cancellable commitments

61,673


63,782


   Other off-balance sheet exposures

229,672


210,571


Total of certain off-balance sheet exposures

$

650,820


$

642,983


Less: Tier 1 Capital deductions

64,458


73,590


Total Leverage Exposure

$

2,486,317


$

2,456,006


Supplementary Leverage ratio

5.96

%

5.43

%


(1)

Citi's estimated Basel III Supplementary Leverage ratio and certain related components are non-GAAP financial measures. Citi believes this ratio and its components provide useful information to investors and others by measuring Citigroup's progress against future regulatory capital standards.

(2)

Pro forma presentation based on application of the Revised Final Basel III Rules consistent with current period presentation.

(3)

Represents the daily average of on-balance sheet assets for the quarter.

(4)

Represents the average of certain off-balance sheet exposures calculated as of the last day of each month in the quarter.

(5)

Under the Revised Final Basel III Rules, banking organizations are required to include in TLE the effective notional amount of sold credit derivatives, with netting of exposures permitted if certain conditions are met.

(6)

Repo-style transactions include repurchase or reverse repurchase transactions and securities borrowing or securities lending transactions.


Citigroup's estimated Basel III Supplementary Leverage ratio under the Revised Final Basel III Rules was 6.0% for the fourth quarter of 2014, unchanged from the third quarter of 2014, and increased from 5.4% for the fourth quarter of 2013 (on a pro forma basis to conform to current period presentation). Citi's estimated Basel III Supplementary Leverage ratio remained unchanged quarter-over-quarter as the Tier 1 Capital benefits resulting from preferred stock issuances and a decrease in goodwill were offset by a decrease in Accumulated other comprehensive income (loss) , with Total Leverage Exposure also remaining substantially unchanged. The growth in the ratio from the fourth quarter of 2013 was principally driven by an increase in Tier 1 Capital attributable largely to net income of $7.3 billion, approximately $3.3 billion of DTA utilization and approximately $3.7 billion of perpetual preferred stock issuances, offset in part by a reduction in Accumulated

other comprehensive income (loss) and a marginal increase in Total Leverage Exposure.

Citibank, N.A.'s estimated Basel III Supplementary Leverage ratio under the Revised Final Basel III Rules was 6.3% for the fourth quarter of 2014, unchanged from the third quarter of 2014 and, on a pro forma basis, from the fourth quarter of 2013. Tier 1 Capital benefits resulting from quarterly and annual net income and DTA utilization were largely offset by an increase in Total Leverage Exposure and a reduction in Accumulated other comprehensive income (loss) and, for the year only, cash dividends paid by Citibank, N.A. to its parent, Citicorp, and which were subsequently remitted to Citigroup.




49



Regulatory Capital Standards Developments


GSIB Surcharge

In December 2014, the Federal Reserve Board issued a notice of proposed rulemaking which would impose risk-based capital surcharges upon U.S. bank holding companies that are identified as GSIBs, including Citi. Under the

Federal Reserve Board's proposed rule, consistent with the Basel Committee's methodology, identification as a GSIB would be based primarily on quantitative measurement indicators underlying five equally weighted broad categories of systemic importance: (i) size, (ii) interconnectedness, (iii) cross-jurisdictional activity, (iv) substitutability, and (v) complexity. With the exception of size, each of the other categories are comprised of multiple indicators also of equal weight, and amounting to 12 indicators in total.

A U.S. banking organization that is designated a GSIB under the proposed methodology would calculate a surcharge using two methods and would be subject to the higher of the resulting two surcharges. The first method ("method 1") would be based on the same five broad categories of systemic importance used to identify a GSIB, whereas under the second method ("method 2") the substitutability indicator would be replaced with a measure intended to assess the extent of a GSIB's reliance on short-term wholesale funding. As proposed, given that the calculation under method 2 involves, in part, the doubling of the indicator scores related to size, interconnectedness, cross-jurisdictional activity and complexity, method 2 would generally result in higher surcharges as compared to method 1.



Estimated GSIB surcharges under the proposed rule, which would be required to be comprised entirely of Common Equity Tier 1 Capital, would initially range from 1.0% to 4.5% of total risk-weighted assets. Moreover, the GSIB surcharge would be an extension of the Capital Conservation Buffer and, if invoked, any Countercyclical Capital Buffer, and would result in restrictions on earnings distributions (e.g., dividends, equity repurchases, and discretionary executive bonuses) should the surcharge be drawn upon to absorb losses during periods of financial or economic stress, with the degree of such restrictions based upon the extent to which the surcharge is drawn.

Under the proposal, like that of the Basel Committee's rule, the GSIB surcharge would be introduced in parallel with the Capital Conservation Buffer and, if applicable, any Countercyclical Capital Buffer, commencing phase-in on January 1, 2016 and becoming fully effective on January 1, 2019.

As of December 31, 2014, Citi estimates its GSIB surcharge under the Federal Reserve Board's proposal would be 4%, compared to at least 2% under the Basel Committee requirements.

For additional information regarding the Federal Reserve Board's GSIB surcharge proposal, as well as the Financial Stability Board's total loss-absorbing capacity, or TLAC, consultative document, see "Risk Factors-Regulatory Risks" and "Managing Global Risk-Market Risk-Funding and Liquidity Risk" below.



50



Tangible Common Equity, Tangible Book Value Per Share and Book Value Per Share

Tangible common equity (TCE), as currently defined by Citi, represents common equity less goodwill and other intangible assets (other than MSRs). Other companies may calculate TCE in a different manner. TCE and tangible book value per share are non-GAAP financial measures. Citi believes these capital metrics provide useful information, as they are used by investors and industry analysts.












In millions of dollars or shares, except per share amounts

December 31,
2014

December 31, 2013

Total Citigroup stockholders' equity

$

210,534


$

204,339


Less: Preferred stock

10,468


6,738


Common equity

$

200,066


$

197,601


Less: Intangible assets:

    Goodwill

23,592


25,009


    Other intangible assets (other than MSRs)

4,566


5,056


    Goodwill related to assets held-for-sale

71


Tangible common equity (TCE)

$

171,837


$

167,536


Common shares outstanding (CSO)

3,023.9


3,029.2


Tangible book value per share (TCE/CSO)

$

56.83


$

55.31


Book value per share (common equity/CSO)

$

66.16


$

65.23
















51



RISK FACTORS


The following discussion sets forth what management currently believes could be the most significant regulatory, credit and market, liquidity, legal and business and operational risks and uncertainties that could impact Citi's businesses, results of operations and financial condition. Other risks and uncertainties, including those not currently known to Citi or its management, could also negatively impact Citi's businesses, results of operations and financial condition. Thus, the following should not be considered a complete discussion of all of the risks and uncertainties Citi may face.


REGULATORY RISKS


Citi Faces Ongoing Significant Regulatory Changes and Uncertainties in the U.S. and Non-U.S. Jurisdictions in Which It Operates That Negatively Impact the Management of Its Businesses and Increase Its Compliance Risks and Costs.

Citi continues to be subject to a significant number of regulatory changes and uncertainties across the U.S. and the non-U.S. jurisdictions in which it operates. Not only has the heightened regulatory environment facing financial institutions such as Citi resulted in a tendency toward more regulation, but also in some cases toward the most prescriptive regulation as regulatory agencies have often taken a restrictive approach to rulemaking, interpretive guidance, approvals and their general ongoing supervisory or prudential authority. Moreover, even when U.S. and international regulatory initiatives overlap, such as with derivatives reforms, in many instances they have not been undertaken on a coordinated basis, and areas of divergence have developed with respect to the scope, interpretation, timing, structure or approach, leading to additional, inconsistent or even conflicting regulations.

Ongoing regulatory changes and uncertainties make Citi's business planning difficult and could require Citi to change its business models or even its organizational structure, all of which could ultimately negatively impact Citi's individual businesses, overall strategy and results of operations as well as realization of its deferred tax assets (DTAs). For example, several jurisdictions, including in Asia, Latin America and Europe, continue to enact fee and rate limits on debit and credit card transactions as well as various limits on sales practices for these and other areas of consumer lending, which could, among other things, negatively impact GCB 's businesses and revenues. In addition, during 2014, financial reform legislation was enacted in Mexico that required an antitrust study of the Mexican financial sector. The study has been issued and its recommendations include additional regulations intended to increase competition in the financial services industry in Mexico, which could negatively impact Citi's Banamex subsidiary, Mexico's second largest bank. In certain jurisdictions, including in the European Union (EU), there is discussion of adopting a financial transaction tax or similar fees on large financial institutions such as Citi, which could increase the costs to engage in certain transactions or otherwise negatively impact Citi's results of operations. In addition, various regulators globally continue to consider

adoption of data privacy and/or "onshoring" requirements, such as the EU data protection framework, that would restrict the storage and use of client information. These regulations could conflict with anti-money laundering and other requirements in other jurisdictions, impede information sharing between Citi's businesses and increase Citi's compliance risks and costs. They could also impede or potentially reverse Citi's centralization or standardization efforts, which provide expense efficiencies.

Unless and until there is sufficient regulatory certainty, Citi's business planning and/or proposed pricing for affected businesses necessarily include assumptions based on possible or proposed rules, requirements or outcomes. Business planning is further complicated by management's continual need to review and evaluate the impact on Citi's businesses of ongoing rule proposals, final rules, and implementation guidance from numerous regulatory bodies worldwide, often within compressed timeframes. In some cases, management's implementation of a regulatory requirement and assessment of its impact is occurring simultaneously with changing regulatory guidance, legal challenges or legislative action to modify or repeal final rules, thus increasing management uncertainty.

Ongoing regulatory changes also result in higher regulatory and compliance risks and costs. Citi estimates its regulatory and compliance costs have grown approximately 10% annually since 2011. These higher regulatory and compliance costs partially offset Citi's continued cost reduction initiatives that are part of its execution priorities and negatively impact its results of operations. Ongoing regulatory changes and uncertainties also require management to continually manage Citi's expenses and potentially reallocate resources, including potentially away from ongoing business investment initiatives.


There Continue to Be Changes and Uncertainties Relating to the Regulatory Capital Requirements Applicable to Citi and the Ultimate Impact of These Requirements on Citi's Businesses, Products and Results of Operations.

Despite the adoption of the final U.S. Basel III rules, there continue to be changes and uncertainties regarding the regulatory capital requirements applicable to, and, as a result, the ultimate impact of these requirements on, Citi.

Citi's Basel III capital ratios and related components are subject to, among other things, ongoing regulatory supervision, including review and approval of Citi's credit, market and operational risk models, additional refinements, modifications or enhancements (whether required or otherwise) to these models and any further implementation guidance in the U.S. Modifications or requirements resulting from these ongoing reviews, as well as the ongoing efforts by U.S. banking agencies to finalize and enhance the regulatory capital framework, have resulted and could continue to result in changes to Citi's risk-weighted assets, total leverage exposure or other components of Citi's capital ratios. These changes can negatively impact Citi's capital ratios and its ability to achieve its capital requirements as it projects or as required. Further, because operational risk is measured based not only upon Citi's historical loss experience but also upon


52



ongoing events in the banking industry generally, Citi's level of operational risk-weighted assets is likely to remain elevated for the foreseeable future, despite Citi's continuing efforts to reduce its risk-weighted assets and exposures.

Moreover, in December 2014, the Federal Reserve Board issued a notice of proposed rulemaking that would establish a risk-based capital surcharge for global systemically important bank holding companies (GSIB) in the U.S., including Citi. The Federal Reserve Board's proposal is based on the Basel Committee on Banking Supervision's (Basel Committee) GSIB surcharge framework, but adds an alternative method for calculating a U.S. GSIBs score (and thus its GSIB surcharge), which Citi expects will result in a significantly higher surcharge than the 2% calculated under the Basel Committee's framework (for additional information on the details of the proposal, see "Capital Resources-Regulatory Capital Standards Developments" above).

The Federal Reserve Board's GSIB proposal creates ongoing uncertainty with respect to the ultimate surcharge applicable to Citi due to, among other things, the (i) requirement to recalculate the surcharge on an annual basis; (ii) complex calculations required to determine the amount of the surcharge; and (iii) the score for the indicators aligned with the Basel Committee GSIB framework is to be determined by converting Citi's indicators into Euros and calibrating proportionally against a denominator based upon the aggregate indicator scores of other large global banking organizations, meaning that Citi's score will fluctuate based on actions taken by these banking organizations, as well as movements in foreign exchange rates. Moreover, based on the Financial Stability Board's (FSB) proposed "total loss-absorbing capacity" (TLAC) requirements, a higher GSIB surcharge would limit the amount of Common Equity Tier 1 Capital otherwise available to satisfy, in part, the TLAC requirements and thus potentially result in the need for Citi to issue higher levels of qualifying debt and preferred equity (for additional information, see "Regulatory Risks" and "Managing Global Risk-Market Risk-Funding and Liquidity Risk" below).

In addition to the Federal Reserve Board's GSIB proposal, various other proposals which could impact Citi's regulatory capital framework are also being considered by regulatory bodies both in the U.S. and internationally, which further contribute to the uncertainties faced by financial institutions, including Citi. For example, the SEC has indicated that it is considering adopting rules that would impose a leverage ratio requirement for U.S. broker-dealers, which could result in the reduction of certain types of short-term funding, among other potential negative impacts. In addition, the Basel Committee continues to review and revise various aspects of its rules, including its model-based capital framework and standardized approaches to market, credit and operational risk.

As a result of these ongoing uncertainties, Citi's capital planning and management remains challenging. The Federal Reserve Board's GSIB surcharge and other U.S. and international proposals could require Citi to further increase its capital and limit or otherwise restrict how Citi utilizes its capital, which could negatively impact its businesses, product offerings and results of operations. It also remains uncertain

as to what the overall impact of these regulatory capital changes will be on Citi's competitive position, among both domestic and international peers.


Citi's Inability to Enhance its 2015 Resolution Plan Submission Could Subject Citi to More Stringent Capital, Leverage or Liquidity Requirements, or Restrictions on Its Growth, Activities or Operations, and Could Eventually Require Citi to Divest Assets or Operations in Ways That Could Negatively Impact Its Operations or Strategy.

Title I of The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) requires Citi to prepare and submit annually a plan for the orderly resolution of Citigroup (the bank holding company) and its significant legal entities under the U.S. Bankruptcy Code or other applicable insolvency law in the event of future material financial distress or failure. Citi is also required to prepare and submit an annual resolution plan for its primary insured depository institution subsidiary, Citibank, N.A., and to demonstrate how Citibank, N.A. is adequately protected from the risks presented by non-bank affiliates. These plans, which require substantial effort, time and cost across all of Citi's businesses and geographies, are subject to review by the Federal Reserve Board and the FDIC.

In August 2014, the Federal Reserve Board and the FDIC announced the completion of reviews of the 2013 resolution plans submitted by Citi and 10 other financial institutions. The agencies identified shortcomings with the firms' 2013 resolution plans, including Citi's. These shortcomings generally included (i) assumptions that the agencies regarded as unrealistic or inadequately supported, such as assumptions about the likely behavior of customers, counterparties, investors, central clearing facilities, and regulators; and (ii) the failure to make, or identify, the kinds of changes in firm structure and practices that would be necessary to enhance the prospects for orderly resolution. At the same time, the Federal Reserve Board and FDIC indicated that if the identified shortcomings are not addressed in the firms' 2015 plan submissions, the agencies expect to use their authority under Title I of the Dodd-Frank Act.

Under Title I, if the Federal Reserve Board and the FDIC jointly determine that Citi's 2015 resolution plan is not "credible" (which, although not defined, is generally believed to mean the regulators do not believe the plan is feasible or would otherwise allow the regulators to resolve Citi in a way that protects systemically important functions without severe systemic disruption), Citi could be subjected to more stringent capital, leverage or liquidity requirements or restrictions, or restrictions on its growth, activities or operations, and eventually be required to divest certain assets or operations in ways that could negatively impact its operations and strategy. In August 2014, the FDIC determined that the 2013 resolution plans submitted by the 11 "first wave" filers, including Citi, were "not credible."

Other jurisdictions, such as the U.K., have also requested or are expected to request resolution plans from financial institutions, including Citi, and the requirements and timing relating to these plans are or are expected to be different from the U.S. requirements and from each other. Responding to


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these additional requests will require additional effort, time and cost, and regulatory review and requirements in these jurisdictions could be in addition to, or conflict with, changes required by Citi's regulators in the U.S.


There Continues to Be Significant Uncertainty Regarding the Implementation of Orderly Liquidation Authority and the Impact It Could Have on Citi's Funding and Liquidity, Results of Operations and Competitiveness.

Title II of the Dodd-Frank Act grants the FDIC the authority, under certain circumstances, to resolve systemically important financial institutions, including Citi. The FDIC has released a notice describing its preferred "single point of entry strategy" for such resolution, pursuant to which, generally, a bank holding company would be placed in receivership, the unsecured long-term debt of the holding company would bear losses and the operating subsidiaries would be recapitalized.

Consistent with this strategy, in November 2014, the FSB issued a consultative document designed to ensure that GSIBs have sufficient loss-absorbing and recapitalization capacity in resolution to implement an orderly resolution. Specifically, the proposal would (i) establish a new firm-specific minimum requirement for TLAC; (ii) stipulate which liabilities of the GSIB would be eligible TLAC; and (iii) the location of the TLAC within the firm's overall funding structure, including the "pre-positioning" of specified amounts of TLAC to identified material subsidiaries within the firm's structure, including international entities (for additional information on the TLAC proposal, see "Managing Global Risk-Market Risk-Funding and Liquidity Risk" below). It is expected that the Federal Reserve Board will issue a proposal to establish similar TLAC requirements for U.S. GSIBs during 2015.

There are significant uncertainties and interpretive issues arising from the FSB proposal, including (i) the minimum TLAC requirement for Citi; (ii) the amount of Citi's TLAC that must be pre-positioned to material subsidiaries within Citi's structure, and the identification of those entities; and (iii) which of Citi's existing long-term liabilities constitute eligible TLAC. Moreover, based on the FSB's proposal, the minimum TLAC requirement must be met excluding regulatory capital instruments used to satisfy Citi's regulatory capital buffers, resulting in a higher overall TLAC requirement consisting of the required TLAC minimum plus required capital buffers. As a result, as discussed in the regulatory capital risk factor above, a higher GSIB surcharge would potentially result in the need for Citi to issue higher levels of qualifying debt and preferred equity. The FSB's proposal also provides guidance for regulatory authorities to determine additional TLAC requirements, specific to individual financial institutions. Accordingly, similar to the Federal Reserve Board's U.S. GSIB proposal, the Federal Reserve Board could propose TLAC requirements for Citi that are higher or more stringent than its international peers or even its U.S. peers.

To the extent Citi does not meet any final minimum TLAC requirement, it would need to re-position its funding profile, including potentially issuing additional TLAC-eligible instruments and/or replacing existing non-TLAC eligible

funding with TLAC-eligible funding. This could increase Citi's costs of funds, alter its current funding and liquidity planning and management and/or negatively impact its revenues and results of operations. In addition, the requirement to pre-position TLAC-eligible instruments with material subsidiaries could result in significant funding inefficiencies, increase Citi's overall liquidity requirements by reducing the fungibility of its funding sources and require certain of Citi's subsidiaries to replace lower cost funding with other higher cost funding. Furthermore, Citi could be at a competitive disadvantage versus financial institutions that are not subject to such minimum requirements, such as non-regulated financial intermediaries, smaller financial institutions and entities in jurisdictions with less onerous or no such requirements.


The Impact to Citi's Derivatives Businesses, Results of Operations and Competitive Position Resulting from the Ongoing Implementation of Derivatives Regulation in the U.S. and Globally Continues to Be Difficult to Predict.

The ongoing implementation of derivatives regulations in the U.S. as well as in non-U.S. jurisdictions has impacted, and will likely continue to substantially impact, the derivatives markets. However, given the additional rulemaking expected to occur as well as the ongoing interpretive issues across jurisdictions, it is not yet possible to determine what the ultimate impact to Citi's global derivatives businesses, results of operations and competitive position will be.

For example, under the CFTC's rules relating to the registration of swap execution facilities (SEF), certain non-U.S. trading platforms that do not want to register with the CFTC as a SEF are prohibiting firms with U.S. contacts, such as Citi, from trading on their non-U.S. platforms. In addition, pursuant to the CFTC's mandatory clearing requirements for the overseas branches of Citibank, N.A., certain of Citi's non-U.S. clients have ceased to clear their swaps with Citi given the mandatory requirement. More broadly, under the CFTC's cross-border guidance, overseas clients who transact their derivatives business with overseas branches of U.S. banks, including Citi, could be subject to additional U.S. registration and derivatives requirements, and these clients continue to look for alternatives to dealing with overseas branches of U.S. banks as a result. All of these and similar changes have resulted in some bifurcated activity in the swaps marketplace, between U.S.-person and non-U.S.-person markets, which could disproportionately impact Citi given its global footprint.

In addition, in September 2014, U.S. regulators re-proposed rules relating to margin requirements for uncleared swaps. As re-proposed, the rules would require Citibank, N.A. to both collect and post margin to counterparties, as well as collect and post margin to its affiliates, in connection with any uncleared swap, with the initial margin required to be held by unaffiliated third-party custodians. As a result, any new margin requirements could significantly increase the cost to Citibank, N.A. and its counterparties of conducting uncleared swaps. In addition, the requirements would also apply to the non-U.S. branches of Citibank, N.A. and certain non-U.S. affiliates, which could result in further competitive disadvantages for Citi if it is required to collect margin on


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uncleared swaps in non-U.S. jurisdictions prior to competitors in those jurisdictions being required to do so, if required to do so at all.

Further, the EU continues to finalize various aspects of its European Market Infrastructure Regulation (EMIR), and the EU and CFTC have yet to render any "equivalency" determinations (i.e., regulatory acknowledgment of the equivalency of derivatives regimes), which has compounded the bifurcation of the swaps market, as noted above. Regulators in Asia also continue to finalize their derivatives reforms which, to date, have taken a different approach as compared to the EU or the U.S. Because most of these non-U.S. reforms are not yet finalized, it is uncertain to what extent the non-U.S. reforms will impose different, additional or even inconsistent requirements on Citi's derivatives activities.

While the implementation and effectiveness of individual derivatives reforms may not in every case be significant, the cumulative impact of these reforms continues to be uncertain and could be material to Citi's results of operations and the competitive position of its derivatives businesses.

In addition, numerous aspects of the new derivatives regime require extensive compliance systems and processes to be maintained, including electronic recordkeeping, real-time public transaction reporting and external business conduct requirements (e.g., required swap counterparty disclosures). This compliance risk increases to the extent the final non-U.S. reforms are different from or inconsistent with the final U.S. reforms. Citi's failure to effectively maintain such systems, across jurisdictions, could subject it to increased compliance costs and regulatory and reputational risks, particularly given the heightened regulatory environment in which Citi operates globally.


The Continued Implementation of the Volcker Rule and Similar Reform Efforts Subject Citi to Regulatory and Compliance Risks and Costs.

Although the rules implementing the restrictions under the Volcker Rule were finalized in December 2013, and the conformance period was generally extended to July 2015, the final rules require Citi to develop an extensive compliance regime for the "permitted" activities under the Volcker Rule, including documentation of historical trading activities with clients, individual testing and training, regulatory reporting, recordkeeping and similar requirements as well as an annual CEO certification with respect to the processes Citi has in place to ensure compliance with the final rules. Moreover, despite the passage of time since the adoption of the final rules, there continues to be uncertainty regarding the interpretation of certain provisions of the final rules, including with respect to the covered funds provisions and the permitted activities under the rules. As a result, Citi is required to make certain assumptions as to the degree to which its activities are permitted to continue. If Citi's implementation of the required compliance regime is not consistent with regulatory expectations or requirements, or if Citi's assumptions in implementation of the final rules are not accurate, Citi could be subject to increased regulatory and compliance risks and costs as well as potential reputational harm.

Proposals for structural reform of banking entities, including restrictions on proprietary trading, also continue to be introduced in various non-U.S. jurisdictions, thus leading to overlapping or potentially conflicting regimes. For example, in the EU, the Bank Structural Reform draft directive (formerly known as the "Liikanen" or "Barnier" Proposal) would prohibit proprietary trading by in-scope credit institutions and banking groups, such as certain of Citi's EU branches, and potentially result in the mandatory separation of certain trading activities into a trading entity legally, economically and operationally separate from the legal entity holding the banking activities of a firm.

It is likely that, given Citi's worldwide operations, some form of these or other proposals for the regulation of proprietary trading will eventually be applicable to a portion of Citi's operations. While the Volcker Rule and these non-U.S. proposals are intended to address similar concerns-separating the perceived risks of proprietary trading and certain other investment banking activities in order not to affect more traditional banking and retail activities-they would do so under different structures, which could result in inconsistent regulatory regimes and additional compliance risks and costs for Citi in light of its global activities.


Recently Adopted and Future Regulations Applicable to Securitizations Could Impose Additional Costs and May Discourage Citi from Performing Certain Roles in Securitizations.

Citi endeavors to play a variety of roles in asset securitization transactions, including acting as underwriter, issuer, sponsor, depositor, trustee and counterparty. During the latter part of 2014, numerous regulatory changes relating to securitizations were finalized, including risk retention requirements for securitizers of certain assets and extensive changes to the SEC's Regulation AB, including changes to the registration, disclosure and reporting requirements for asset-backed securities and other structured finance products.

Because certain of these rules were recently adopted, the multi-agency implementation has just begun and extensive interpretive issues remain. As a result, the cumulative impact of these changes, as well as additional regulations yet to be finalized, both on Citi's participation in these transactions as well as on the securitization markets generally, is uncertain. It is likely that many aspects of the new rules will increase the costs of securitization transactions. It is also possible that these changes may hinder the recovery of previously active securitization markets or decrease the attractiveness of Citi's executing or participating in certain securitization transactions, including securitization transactions which Citi previously executed or in which it participated, such as private-label mortgage securitizations. This could in turn reduce the income Citi earns from these transactions or hinder Citi's ability to use such transactions to hedge risks, reduce exposures or reduce assets with adverse risk-weighting within its businesses.



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CREDIT AND MARKET RISKS


Macroeconomic Challenges in the U.S. and Globally, Including in the Emerging Markets, Could Have a Negative Impact on Citi's Businesses and Results of Operations.

Citi has experienced, and could experience in the future, negative impacts to its businesses and results of operations, such as elevated credit costs and/or decreased revenues in its Markets and securities services businesses, as a result of macroeconomic challenges, uncertainties and volatility. While the U.S. economy continues to improve, it remains susceptible to global events and volatility. Moreover, U.S. fiscal and monetary actions, or expected actions, can also impact not only the U.S. but global markets and economies as well as Citi's businesses and results of operations. For example, the Federal Reserve Board may begin to increase short-term interest rates during 2015. Speculation about the timing of such a change has previously resulted in significant volatility in the U.S. and global markets. While Citi expects certain positive impacts as a result, such as an increase in net interest revenue (for additional information, see "Managing Global Risk-Market Risk-Price Risk" below), the ultimate impact to Citi's businesses and results of operations will depend on the timing, amount and market and consumer or other reactions to any such increases.

In addition, concerns remain regarding various U.S. government fiscal challenges and events that could occur as a result, such as a potential U.S. government shutdown or default. In recent years, these issues, including potential or actual ratings downgrades of U.S. debt obligations, have adversely affected U.S. and global financial markets, economic conditions and Citi's businesses, results of operations and financial condition, and they could do so again in the future.

Outside of the U.S., the global economic recovery remains uneven and uncertain. The economic and fiscal situations of several European countries remain fragile, and geopolitical tensions throughout the region, including in Russia, have added to the uncertainties. Fiscal and monetary actions, or expected actions, throughout the region have further impacted the global financial markets as well as Citi's businesses and results of operations. While concerns relating to sovereign defaults or a partial or complete break-up of the European Monetary Union (EMU), including potential accompanying redenomination risks and uncertainties, seemed to have abated during 2014, such concerns have resurfaced with the election of a new government in Greece in January 2015 (for Citi's third-party assets and liabilities in Greece as of December 31, 2014, see "Managing Global Risk-Country and Cross-Border Risk" below).

Slower growth in certain emerging markets, such as China, has also occurred, whether due to global macroeconomic conditions or geopolitical tensions, governmental or regulatory policies or economic conditions within the particular region or country (for additional information on risks specific to the emerging markets, see the risk factor below). Given Citi's strategy and focus on the emerging markets, actual or perceived uncertainty regarding future economic growth in the emerging markets has impacted

and could continue to negatively impact Citi's businesses and results of operations, and Citi could be disproportionately impacted as compared to its competitors. Further, if a particular country's economic situation were to deteriorate below a certain level, U.S. regulators can and have imposed mandatory loan loss and other reserve requirements on Citi, which could negatively impact its cost of credit and earnings, perhaps significantly (see, e.g., "Managing Global Risk-Country and Cross-Border Risk-Argentina" below).

Citi's Extensive Global Network Subjects It to Various International and Emerging Markets Risks as well as Increased Compliance and Regulatory Risks and Costs.

During 2014, international revenues accounted for approximately 58%, and emerging markets revenues accounted for approximately 40%, of Citi's total revenues (for additional information on how Citi defines the emerging markets as well as its exposures in certain of these markets, see "Managing Global Risk-Country and Cross-Border Risk" below).

Citi's extensive global network subjects it to a number of risks associated with international and emerging markets. These risks can include sovereign volatility, political events, foreign exchange controls, limitations on foreign investment, sociopolitical instability, fraud, nationalization or loss of licenses, sanctions, potential criminal charges, closure of branches or subsidiaries and confiscation of assets. For example, Citi operates in several countries that have strict foreign exchange controls, such as Argentina and Venezuela, that limit its ability to convert local currency into U.S. dollars and/or transfer funds outside the country. During 2014, Citi discovered certain frauds involving its Mexico subsidiary, Banamex. There have also been instances of political turmoil and other instability in certain countries in which Citi operates, such as in Russia, Ukraine and the Middle East, which have required management time and attention (e.g., monitoring the impact of sanctions on Russian entities, business sectors, individuals or otherwise on Citi's businesses and results of operations).

Citi's extensive global operations also increase its compliance and regulatory risks and costs. For example, Citi's operations in emerging markets, including facilitating cross-border transactions on behalf of its clients, subject it to higher compliance risks under U.S. regulations primarily focused on various aspects of global corporate activities, such as anti-money-laundering regulations and the Foreign Corrupt Practices Act. These risks can be more acute in less developed markets and thus require substantial investment in compliance infrastructure or could result in a reduction in certain of Citi's business activities. Any failure by Citi to comply with applicable U.S. regulations, as well as the regulations in the countries and markets in which it operates as a result of its global footprint, could result in fines, penalties, injunctions or other similar restrictions, any of which could negatively impact Citi's earnings and its reputation.



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Citi's Results of Operations Could Be Negatively Impacted as Its Revolving Home Equity Lines of Credit Continue to "Reset."

As of December 31, 2014, Citi's home equity loan portfolio of approximately $28.1 billion included approximately $16.7 billion of home equity lines of credit that were still within their revolving period and had not commenced amortization, or "reset" (Revolving HELOCs). Of these Revolving HELOCs, approximately 78% will commence amortization during the period of 2015–2017 (for additional information, see "Managing Global Risk-Credit Risk- North America Consumer Mortgage Lending" below).

Before commencing amortization, Revolving HELOC borrowers are required to pay only interest on their loans. Upon amortization, these borrowers are required to pay both interest, usually at a variable rate, and principal that typically amortizes over 20 years, rather than the typical 30-year amortization. As a result, Citi's customers with Revolving HELOCs that reset could experience "payment shock" due to the higher required payments on the loans. Increases in interest rates could further increase these payments, given the variable nature of the interest rates on these loans post-reset.

Based on the limited number of Citi's Revolving HELOCs that have reset as of December 31, 2014, Citi has experienced a higher 30+ days past due delinquency rate on its amortizing home equity loans as compared to its total outstanding home equity loan portfolio (amortizing and non-amortizing). Moreover, a portion of the resets that have occurred to date occurred during a period of declining interest rates, which Citi believes likely reduced the overall payment shock to borrowers. While Citi continues to monitor this reset risk closely and review and take additional actions to offset potential reset risk, increasing interest rates, stricter lending criteria and high borrower loan-to-value positions could limit Citi's ability to reduce or mitigate this reset risk going forward. Accordingly, as these loans continue to reset, Citi could experience higher delinquency rates and increased loan loss reserves and net credit losses in future periods, which could be significant and would negatively impact its results of operations.


Concentrations of Risk Can Increase the Potential for Citi to Incur Significant Losses.

Concentrations of risk, particularly credit and market risk, can increase Citi's risk of significant losses. As of December 31, 2014, Citi's most significant concentration of credit risk was with the U.S. government and its agencies, which primarily results from trading assets and investments issued by the U.S. government and its agencies (for additional information, see Note 24 to the Consolidated Financial Statements). Citi also routinely executes a high volume of securities, trading, derivative and foreign exchange transactions with counterparties in the financial services industry, including banks, other financial institutions, insurance companies, investment banks and government and central banks. To the extent regulatory or market developments lead to increased centralization of trading activity through particular clearing houses, central agents or exchanges, this could also increase Citi's concentration of risk in this industry. Concentrations of

risk can limit, and have limited, the effectiveness of Citi's hedging strategies and have caused Citi to incur significant losses, and they may do so again in the future.


LIQUIDITY RISKS


Citi's Liquidity Planning, Management and Funding Could Be Negatively Impacted by the Heightened Regulatory Focus on and Continued Changes to Liquidity Standards and Requirements.

In September 2014, the U.S. banking agencies adopted final rules with respect to the U.S. Basel III Liquidity Coverage Ratio (LCR) (for additional information on the final LCR requirements, see "Managing Global Risk-Market Risk-Funding and Liquidity Risk" below). Implementation of the final LCR requirements requires Citi to maintain extensive compliance procedures and systems, including systems to calculate Citi's LCR daily once the rules are fully implemented. Moreover, Citi's liquidity planning, stress testing and management remains subject to heightened regulatory scrutiny and review, including pursuant to the Federal Reserve Board's Comprehensive Liquidity Analysis and Review (CLAR) as well as regulators' enhanced prudential standards authority. If Citi's interpretation or implementation of the LCR requirements, or its overall liquidity planning and management, is not consistent with regulatory expectations or requirements, Citi's funding and liquidity could be negatively impacted and it could incur increased compliance risks and costs.

In addition, in October 2014, the Basel Committee adopted final rules relating to the Net Stable Funding Ratio (NSFR), and the U.S. banking agencies are expected to propose U.S. NSFR rules during 2015 (for additional information on the Basel Committee's final NSFR rules, see "Managing Global Risk-Market Risk-Funding and Liquidity Risk" below). Several aspects of the Basel Committee's final NSFR rules will likely require further analysis and clarification, including with respect to the calculation of derivative assets and liabilities and netting of these assets. The final rules also leave discretion to national supervisors (i.e., the U.S. banking agencies) in several areas. Accordingly, like other areas of regulatory reform, it remains uncertain whether the U.S. NSFR rules might be more restrictive than the Basel Committee's final NSFR. It also remains uncertain whether other entities or subsidiaries within Citi's structure will be required to comply with the NSFR requirements, as well as the parameters of any such requirements.

Until these parameters are known, it is not possible to determine the potential impact to Citi's, or its subsidiaries', liquidity planning, management or funding. Moreover, to the extent other jurisdictions propose or adopt quantitative liquidity requirements that differ from any of the Basel Committee's or the U.S. liquidity requirements, Citi could be at a competitive disadvantage because of its global footprint or could be required to meet different minimum liquidity standards in some or all of the jurisdictions in which it operates.


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For a discussion of the potential negative impacts to Citi's liquidity planning, management and funding resulting from the U.S. GSIB capital surcharge proposal and the FSB's TLAC proposal, see "Regulatory Risks" above.


The Maintenance of Adequate Liquidity and Funding Depends on Numerous Factors, Including Those Outside of Citi's Control, Such as Market Disruptions and Increases in Citi's Credit Spreads.

As a global financial institution, adequate liquidity and sources of funding are essential to Citi's businesses. Citi's liquidity and sources of funding can be significantly and negatively impacted by factors it cannot control, such as general disruptions in the financial markets, governmental fiscal and monetary policies, or negative investor perceptions of Citi's creditworthiness.

In addition, Citi's cost and ability to obtain deposits, secured funding and long-term unsecured funding are directly related to its credit spreads. Changes in credit spreads constantly occur and are market driven, including both external market factors and factors specific to Citi, and can be highly volatile. Citi's credit spreads may also be influenced by movements in the costs to purchasers of credit default swaps referenced to Citi's long-term debt, which are also impacted by these external and Citi-specific factors. Moreover, Citi's ability to obtain funding may be impaired if other market participants are seeking to access the markets at the same time, or if market appetite is reduced, as is likely to occur in a liquidity or other market crisis. In addition, clearing organizations, regulators, clients and financial institutions with which Citi interacts may exercise the right to require additional collateral based on these market perceptions or market conditions, which could further impair Citi's access to and cost of funding.

As a holding company, Citi relies on dividends, distributions and other payments from its subsidiaries to fund dividends as well as to satisfy its debt and other obligations. Several of Citi's U.S. and non-U.S. subsidiaries are or may be subject to capital adequacy or other regulatory or contractual restrictions on their ability to provide such payments, including any local regulatory stress test requirements or the proposed TLAC requirements (see "Regulatory Risks" above). Limitations on the payments that Citi receives from its subsidiaries could also impact its liquidity.

The Credit Rating Agencies Continuously Review the Credit Ratings of Citi and Certain of Its Subsidiaries, and Ratings Downgrades Could Have a Negative Impact on Citi's Funding and Liquidity Due to Reduced Funding Capacity and Increased Funding Costs, Including Derivatives Triggers That Could Require Cash Obligations or Collateral Requirements.

The credit rating agencies, such as Fitch, Moody's and S&P, continuously evaluate Citi and certain of its subsidiaries, and their ratings of Citi and its more significant subsidiaries' long-term/senior debt and short-term/commercial paper, as applicable, are based on a number of factors, including standalone financial strength, as well as factors not entirely within the control of Citi and its subsidiaries, such as the

agencies' proprietary rating agency methodologies and assumptions, the rating agencies' "government support uplift" assumptions, and conditions affecting the financial services industry and markets generally.

Citi and its subsidiaries may not be able to maintain their current respective ratings. Ratings downgrades could negatively impact Citi's ability to access the capital markets and other sources of funds as well as the costs of those funds, and its ability to maintain certain deposits. A ratings downgrade could also have a negative impact on Citi's funding and liquidity due to reduced funding capacity, including derivative triggers, which could take the form of cash obligations and collateral requirements. In addition, a ratings downgrade could also have a negative impact on other funding sources, such as secured financing and other margined transactions for which there are no explicit triggers, as well as on contractual provisions, which contain minimum ratings thresholds in order for Citi to hold third-party funds.

Moreover, credit ratings downgrades can have impacts, which may not be currently known to Citi or which are not possible to quantify. For example, some entities may have ratings limitations as to their permissible counterparties, of which Citi may or may not be aware. In addition, certain of Citi's corporate customers and trading counterparties, among other clients, could re-evaluate their business relationships with Citi and limit the trading of certain contracts or market instruments with Citi in response to ratings downgrades. Changes in customer and counterparty behavior could impact not only Citi's funding and liquidity but also the results of operations of certain Citi businesses. For additional information on the potential impact of a reduction in Citi's or Citibank, N.A.'s credit ratings, see "Managing Global Risk-Market Risk-Funding and Liquidity-Credit Ratings" below.


LEGAL RISKS


Citi Is Subject to Extensive Legal and Regulatory Proceedings, Investigations and Inquiries That Could Result in Significant Penalties and Other Impacts on Citi, Its Businesses and Results of Operations.

At any given time, Citi is defending a significant number of legal and regulatory proceedings and is subject to numerous governmental and regulatory examinations, investigations and other inquiries. The frequency with which such proceedings, investigations and inquiries are initiated, and the severity of the remedies sought (and in several cases obtained), have increased substantially over the last few years, and the global judicial, regulatory and political environment generally remains hostile to large financial institutions such as Citi.

Continued heightened scrutiny of the financial services industry by regulators and other enforcement authorities has led to questioning of industry practices and additional expectations regarding Citi's management and oversight of third parties doing business with Citi (e.g., vendors). In addition, U.S. and non-U.S. regulators are increasingly focused on "conduct risk," a term that is used to describe the risks associated with misconduct by employees and agents that could harm consumers, investors, or the markets, such as failures to safeguard consumers' and investors' personal


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information and improperly creating, selling and marketing products and services, among other forms of misconduct. The increased scrutiny and expectations of financial institutions, including Citi, and the questioning of the overall "culture" of Citi and the financial services industry generally as well as the effectiveness of Citi's control functions, has and could continue to lead to more regulatory or other enforcement proceedings. While Citi takes numerous steps to prevent and detect misconduct by employees and agents, misconduct may not always be deterred or prevented.

In addition, the complexity of the federal and state regulatory and enforcement regimes in the U.S., coupled with the global scope of Citi's operations and the continued aggressiveness of the regulatory environment worldwide, also means that a single event may give rise to a large number of overlapping investigations and regulatory proceedings, either by multiple federal and state agencies in the U.S. or by multiple regulators and other governmental entities in different jurisdictions.

For example, Citi is subject to extensive legal and regulatory inquiries, actions and investigations, including by the Antitrust Division and the Criminal Division of the U.S. Department of Justice, relating to Citi's contribution to, or trading in products linked to, rates or benchmarks. These rates and benchmarks may relate to foreign exchange rates (such as the WM/Reuters fix), interest rates (such as the London Inter-Bank Offered Rate (LIBOR) or ISDAFIX), or other prices. Like other banks with operations in the U.S., Citi is also subject to continuing oversight by bank regulators, and inquiries and investigations by other governmental and regulatory authorities, with respect to its anti-money laundering program.

The severity of the remedies sought in these and the other legal and regulatory proceedings to which Citi is subject has increased substantially in recent years. U.S. and certain international governmental entities have emphasized a willingness to bring criminal actions against, or seek criminal convictions from, financial institutions, and criminal prosecutors in the U.S. have increasingly sought and obtained criminal guilty pleas or deferred prosecution agreements against corporate entities and other criminal sanctions from those institutions. Such actions can have significant collateral consequences for a subject financial institution, including loss of customers and business, and the inability to offer certain products or services and/or operate certain businesses. In addition, in recent years Citi has entered into consent orders and paid substantial fines and penalties, or provided monetary and other relief, in connection with the resolution of its extensive legal and regulatory matters. Citi may be required to accept or be subject to similar types of criminal or other remedies, fines, penalties and other requirements in the future, any of which could materially and negatively affect Citi's businesses, business practices, financial condition or results of operations, require material changes in Citi's operations, or cause Citi reputational harm. Resolution of these matters also results in significant time, expense and diversion of management's attention.

Further, many large claims asserted against Citi are highly complex and slow to develop, and may involve novel

or untested legal theories. The outcome of such proceedings is difficult to predict or estimate until late in the proceedings, which may last several years. Although Citi establishes accruals for its legal and regulatory matters according to accounting requirements, the amount of loss ultimately incurred in relation to those matters may be substantially higher than the amounts accrued. In addition, certain settlements are subject to court approval and may not be approved.

For additional information relating to Citi's legal and regulatory proceedings, see Note 28 to the Consolidated Financial Statements.


BUSINESS AND OPERATIONAL RISKS


Citi's Ability to Return Capital to Shareholders Substantially Depends on the CCAR Process and the Results of Regulatory Stress Tests.

In addition to Board of Directors' approval, any decision by Citi to return capital to shareholders, whether through an increase in its common stock dividend or through a share repurchase program, substantially depends on regulatory approval, including through the annual Comprehensive Capital Analysis and Review (CCAR) process required by the Federal Reserve Board and the supervisory stress tests required under the Dodd-Frank Act.

In March 2014, the Federal Reserve Board announced that it objected to the capital plan submitted by Citi as part of the 2014 CCAR process, meaning Citi was not able to increase its return of capital to shareholders as it had requested. Citi must address the Federal Reserve Board's concerns, expectations and requirements regarding Citi's capital planning process in order to return additional capital to shareholders under the 2015 CCAR process. Restrictions on Citi's ability to return capital to shareholders as a result of the 2014 CCAR process negatively impacted market and investor perceptions of Citi, and continued restrictions could do so in the future.

Citi's ability to accurately predict or explain to stakeholders the outcome of the CCAR process, and thus address any such market or investor perceptions, is complicated by the Federal Reserve Board's evolving criteria employed in its overall aggregate assessment of Citi. The Federal Reserve Board's assessment of Citi is conducted not only by using the Board's proprietary stress test models, but also a number of qualitative factors, including a detailed assessment of Citi's "capital adequacy process," as defined by the Federal Reserve Board. These qualitative factors were cited by the Federal Reserve Board in its objection to Citi's 2014 capital plan, and the Board has stated that it expects leading capital adequacy practices will continue to evolve and will likely be determined by the Board each year as a result of its cross-firm review of capital plan submissions.

Similarly, the Federal Reserve Board has indicated that, as part of its stated goal to continually evolve its annual stress testing requirements, several parameters of the annual stress testing process may be altered from time to time, including the severity of the stress test scenario, Federal Reserve Board modeling of Citi's balance sheet and the addition of


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components deemed important by the Federal Reserve Board (e.g., a counterparty failure). In addition, as part of the Federal Reserve Board's U.S. GSIB proposal, the Federal Reserve Board indicated that it may consider, at some point in the future, that some or all of Citi's GSIB surcharge be integrated into its post-stress test minimum capital requirements. These parameter and other alterations could further increase the level of capital Citi must meet as part of the stress tests, thus potentially impacting levels of capital returns to shareholders.

Further, because it is not clear how the Federal Reserve Board's proprietary stress test models and qualitative assessment may differ from the modeling techniques and capital planning practices employed by Citi, it is likely that Citi's stress test results (using its own models, estimation methodologies and processes) may not be consistent with those disclosed by the Federal Reserve Board, thus potentially leading to additional confusion and impacts to Citi's perception in the market.


Citi's Ability to Achieve Its 2015 Efficiency and Return on Assets Targets Will Depend in Part on the Successful Achievement of Its Execution Priorities.

In March 2013, Citi established 2015 financial targets for Citicorp's operating efficiency ratio and Citigroup's return on assets. Citi's ability to achieve these targets will depend in part on the successful achievement of its execution priorities, including efficient resource allocation, which includes disciplined expense management; a continued focus on the wind-down of Citi Holdings and maintaining Citi Holdings at or above "break even"; and utilization of its DTAs (see below). Citi's ability to achieve its targets will also depend on factors which it cannot control, such as ongoing regulatory changes, continued higher regulatory and compliance costs and macroeconomic conditions, among others. While Citi continues to take actions to achieve its execution priorities, there is no guarantee that Citi will be successful.

Citi continues to pursue its disciplined expense-management strategy, including re-engineering, restructuring operations and improving efficiency. However, there is no guarantee that Citi will be able to reduce its level of expenses as a result of announced repositioning actions, efficiency initiatives or otherwise, and investments Citi has made in its businesses, or may make in the future, may not be as productive or effective as Citi expects or at all. Citi's expenses also depend, in part, on factors not entirely within its control. For example, during 2014, Citi incurred significant legal and related costs in order to resolve various of its extensive legal and regulatory proceedings and inquiries. In order to achieve its 2015 financial targets, Citi will need to significantly reduce its legal and related costs, as well as repositioning expenses, from 2014 levels.

In addition, while Citi has made significant progress in winding-down Citi Holdings over the last several years, maintaining Citi Holdings at or above "break even" in 2015 will be important to achieving its return on assets target. As discussed under " Global Consumer Banking " and " Institutional Clients Group " above, beginning in the first quarter of 2015, Citi will be reporting certain of its non-core

consumer and institutional businesses as part of Citi Holdings. While Citi expects to maintain Citi Holdings at or above "break even" in 2015 even with the inclusion of these businesses, it may not be able to do so due to factors it cannot control, as described above. In addition, as described under "Citi Holdings" above, the remaining assets in Citi Holdings as of December 31, 2014 consisted of North America consumer mortgages as well as larger remaining businesses, including Citi's legacy CitiFinancial business, and, beginning in the first quarter of 2015, the non-core consumer and institutional businesses referenced above. While Citi's strategy continues to be to reduce the assets in Citi Holdings as quickly as practicable in an economically rational manner, and it expects to substantially complete the exit of the consumer businesses moved to Citi Holdings in the first quarter by the end of 2015, sales of the remaining larger businesses in Citi Holdings will also depend on factors outside of Citi's control, such as market appetite and buyer funding, and the remaining mortgage assets will largely continue to be subject to ongoing run-off and opportunistic sales. As a result, Citi Holdings' remaining assets could have a negative impact on Citi's overall results of operations or financial condition.


Citi's Ability to Utilize Its DTAs, and Thus Reduce the Negative Impact of the DTAs on Citi's Regulatory Capital, Will Be Driven by Its Ability to Generate U.S. Taxable Income.

At December 31, 2014, Citi's net DTAs were $49.5 billion, of which approximately $34.3 billion was excluded from Citi's Common Equity Tier 1 Capital, on a fully implemented basis, under the final U.S. Basel III rules (for additional information, see "Capital Resources-Components of Capital under Basel III (Advanced Approaches with Full Implementation)" above). In addition, of the net DTAs as of year-end 2014, approximately $17.6 billion related to foreign tax credit carry-forwards (FTCs). The carry-forward utilization period for FTCs is 10 years and represents the most time-sensitive component of Citi's DTAs. Of the FTCs at year-end 2014, approximately $1.9 billion expire in 2017, $5.2 billion expire in 2018 and the remaining $10.5 billion expire over the period of 2019–2023. Citi must utilize any FTCs generated in the then-current year prior to utilizing any carry-forward FTCs.

The accounting treatment for realization of DTAs, including FTCs, is complex and requires significant judgment and estimates regarding future taxable earnings in the jurisdictions in which the DTAs arise and available tax planning strategies. Citi's ability to utilize its DTAs, including the FTC components, and thus use the capital supporting the DTAs for more productive purposes, will be dependent upon Citi's ability to generate U.S. taxable income in the relevant tax carry-forward periods. Failure to realize any portion of the DTAs would also have a corresponding negative impact on Citi's net income.

In addition, with regard to FTCs, utilization will be influenced by actions to optimize U.S. taxable earnings for the purpose of consuming the FTC carry-forward component of the DTAs prior to expiration.  These FTC actions, however, may serve to increase the DTAs for other less time sensitive components.  Moreover, tax return limitations on FTCs and


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general business credits that cause Citi to incur current tax expense, notwithstanding its tax carry-forward position, could impact the rate of overall DTA utilization.

DTA utilization will also continue to be driven by movements in Citi's Accumulated other comprehensive income , which can be impacted by changes in interest rates and foreign exchange rates.

For additional information on Citi's DTAs, including the FTCs, see "Significant Accounting Policies and Significant Estimates-Income Taxes" below and Note 9 to the Consolidated Financial Statements.


The Value of Citi's DTAs Could Be Significantly Reduced If

Corporate Tax Rates in the U.S. or Certain State or Foreign Jurisdictions Decline or as a Result of Other Changes in the

U.S. Corporate Tax System .

Congress and the Obama Administration have discussed decreasing the U.S. corporate tax rate. Similar discussions have taken place in certain local, state and foreign jurisdictions, including in New York City and Japan. While Citi may benefit in some respects from any decrease in corporate tax rates, a reduction in the U.S., state or foreign corporate tax rates could result in a decrease, perhaps significant, in the value of Citi's DTAs, which would result in a reduction to Citi's net income during the period in which the change is enacted. There have also been recent discussions of more sweeping changes to the U.S. tax system. It is uncertain whether or when any such tax reform proposals will be enacted into law, and whether or how they will affect Citi's DTAs.


Citi's Interpretation or Application of the Extensive Tax Laws to Which It Is Subject Could Differ from Those of the Relevant Governmental Authorities, Which Could Result in the Payment of Additional Taxes and Penalties.

Citi is subject to the various tax laws of the U.S. and its states and municipalities, as well as the numerous foreign jurisdictions in which it operates. These tax laws are inherently complex and Citi must make judgments and interpretations about the application of these laws to its entities, operations and businesses. Citi's interpretations and application of the tax laws, including with respect to withholding tax obligations and stamp and other transactional taxes, could differ from that of the relevant governmental taxing authority, which could result in the potential for the payment of additional taxes, penalties or interest, which could

be material.


Citi's Operational Systems and Networks Have Been, and Will Continue to Be, Subject to an Increasing Risk of Continually Evolving Cybersecurity or Other Technological Risks Which Could Result in the Disclosure of Confidential Client or Customer Information, Damage to Citi's Reputation, Additional Costs to Citi, Regulatory Penalties and Financial Losses.

A significant portion of Citi's operations relies heavily on the secure processing, storage and transmission of confidential and other information as well as the monitoring of a large number of complex transactions on a minute-by-minute basis.

For example, through its Global Consumer Banking , credit card and securities services businesses, Citi obtains and stores an extensive amount of personal and client-specific information for its retail, corporate and governmental customers and clients and must accurately record and reflect their extensive account transactions. With the evolving proliferation of new technologies and the increasing use of the Internet and mobile devices to conduct financial transactions, large, global financial institutions such as Citi have been, and will continue to be, subject to an increasing risk of cyber incidents from these activities.

Citi's computer systems, software and networks are subject to ongoing cyber incidents such as unauthorized access; loss or destruction of data (including confidential client information); account takeovers; unavailability of service; computer viruses or other malicious code; cyber attacks; and other events. These threats may arise from human error, fraud or malice on the part of employees or third parties, or may result from accidental technological failure. Additional challenges are posed by external parties, including extremist parties and certain foreign state actors that engage in cyber activities as a means to promote political ends. As further evidence of the increasing and potentially significant impact of cyber incidents, during 2014, certain U.S. financial institutions reported cyber incidents affecting their computer systems that resulted in the data of millions of customers being compromised. In addition, several U.S. retailers and other multinational companies reported cyber incidents that compromised customer data.

While these incidents did not impact, or did not have a material impact, on Citi, Citi has been subject to other intentional cyber incidents from external sources over the last several years, including (i) denial of service attacks, which attempted to interrupt service to clients and customers; (ii) data breaches, which aimed to obtain unauthorized access to customer account data; and (iii) malicious software attacks on client systems, which attempted to allow unauthorized entrance to Citi's systems under the guise of a client and the extraction of client data. While Citi's monitoring and protection services were able to detect and respond to the incidents targeting its systems before they became significant, they still resulted in limited losses in some instances as well as increases in expenditures to monitor against the threat of similar future cyber incidents. There can be no assurance that such cyber incidents will not occur again, and they could occur more frequently and on a more significant scale.

Although Citi devotes significant resources to implement, maintain, monitor and regularly upgrade its systems and networks with measures such as intrusion detection and prevention and firewalls to safeguard critical business applications, there is no guarantee that these measures or any other measures can provide absolute security. In addition, because the methods used to cause cyber attacks change frequently or, in some cases, are not recognized until launched, Citi may be unable to implement effective preventive measures or proactively address these methods.

If Citi were to be subject to a cyber incident, it could result in the disclosure of confidential client information, damage to Citi's reputation with its clients and the market,


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customer dissatisfaction, additional costs to Citi (such as repairing systems, replacing customer payment cards or adding new personnel or protection technologies), regulatory penalties, exposure to litigation and other financial losses to both Citi and its clients and customers. Such events could also cause interruptions or malfunctions in the operations of Citi (such as the lack of availability of Citi's online banking system or mobile banking platform), as well as the operations of its clients, customers or other third parties. Given Citi's global footprint and the high volume of transactions processed by Citi, certain errors or actions may be repeated or compounded before they are discovered and rectified, which would further increase these costs and consequences.

Third parties with which Citi does business may also be sources of cybersecurity or other technological risks. Citi outsources certain functions, such as processing customer credit card transactions, uploading content on customer-facing websites, and developing software for new products and services. These relationships allow for the storage and processing of customer information by third-party hosting of or access to Citi websites, which could result in service disruptions or website defacements, and the potential to introduce vulnerable code, resulting in security breaches impacting Citi customers. While Citi engages in certain actions to reduce the exposure resulting from outsourcing, such as performing onsite security control assessments, limiting third-party access to the least privileged level necessary to perform job functions and restricting third-party processing to systems stored within Citi's data centers, ongoing threats may result in unauthorized access, loss or destruction of data or other cyber incidents with increased costs and consequences to Citi such as those discussed above. Furthermore, because financial institutions are becoming increasingly interconnected with central agents, exchanges and clearing houses, including as a result of the derivatives reforms over the last few years, Citi has increased exposure to operational failure or cyber attacks through third parties.

While Citi maintains insurance coverage that may, subject to policy terms and conditions including significant self-insured deductibles, cover certain aspects of cyber risks, such insurance coverage may be insufficient to cover all losses.


Citi Maintains Co-Branding and Private Label Relationships with Various Retailers and Merchants Within Its U.S. Credit Card Businesses in NA GCB, and the Failure to Maintain These Relationships Could Have a Significant Negative Impact on the Results of Operations or Financial Condition of Those Businesses.

Through its U.S. Citi-branded cards and Citi retail services credit card businesses within North America Global Consumer Banking ( NA GCB ), Citi maintains numerous co-branding and private label relationships with third-party retailers and merchants in the ordinary course of business pursuant to which Citi issues credit cards to customers of the retailers or merchants. Citi's co-branding and private label agreements provide for shared economics between the parties and generally have a fixed term. Competition among card issuers such as Citi for these relationships is significant and these

agreements may not be extended or renewed by the parties. These agreements could also be terminated due to, among other factors, a breach by Citi of its responsibilities under the applicable agreement, a breach by the retailer or merchant under the agreement, or external factors, including bankruptcies, liquidations, restructurings or consolidations and other similar events that may occur. While various mitigating factors could be available in the event of the loss of one or more of these relationships, such as replacing the retailer or merchant or by Citi offering new card products, the results of operations or financial condition of Citi-branded cards or Citi retail services, as applicable, or NA GCB could be negatively impacted, and the impact could be significant.


Citi May Incur Significant Losses If Its Risk Management Models, Processes or Strategies Are Ineffective.

Citi employs a broad and diversified set of risk management and mitigation processes and strategies, including the use of various risk models, in analyzing and monitoring the various risks Citi assumes in conducting its activities, such as credit, market and operational risks (for additional information regarding these areas of risk as well as risk management at Citi, see "Managing Global Risk" below). For example, Citi uses models as part of its various stress testing initiatives across the firm. Management of these risks is made even more challenging within a global financial institution such as Citi, particularly given the complex, diverse and rapidly changing financial markets and conditions in which Citi operates.

These models, processes and strategies are inherently limited because they involve techniques, including the use of historical data in some circumstances, and judgments that cannot anticipate every economic and financial outcome in the markets in which Citi operates nor can they anticipate the specifics and timing of such outcomes. Citi could incur significant losses if its risk management models, processes or strategies are ineffective in properly anticipating or managing these risks.


Citi's Performance and the Performance of Its Individual Businesses Could Be Negatively Impacted If Citi Is Not Able to Hire and Retain Qualified Employees for Any Reason.

Citi's performance and the performance of its individual businesses is largely dependent on the talents and efforts of highly skilled employees. Specifically, Citi's continued ability to compete in its businesses, to manage its businesses effectively and to continue to execute its overall global strategy depends on its ability to attract new employees and to retain and motivate its existing employees. Citi's ability to attract and retain employees depends on numerous factors, including its culture, compensation, the management and leadership of the company as well as its individual businesses, Citi's presence in the particular market or region at issue and the professional opportunities it offers.

The banking industry has and may continue to experience more stringent regulation of employee compensation, including limitations relating to incentive-based compensation, clawback requirements and special taxation. Moreover, given its continued focus on the emerging markets,


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Citi is often competing for qualified employees in these markets with entities that have a significantly greater presence in the region or are not subject to significant regulatory restrictions on the structure of incentive compensation. If Citi is unable to continue to attract and retain qualified employees for any reason, Citi's performance, including its competitive position, the successful execution of its overall strategy and its results of operations could be negatively impacted.


Incorrect Assumptions or Estimates in Citi's Financial Statements Could Cause Significant Unexpected Losses in the Future, and Changes to Financial Accounting and Reporting Standards or Interpretations Could Have a Material Impact on How Citi Records and Reports Its Financial Condition and Results of Operations.

Citi is required to use certain assumptions and estimates in preparing its financial statements under U.S. GAAP, including determining credit loss reserves, reserves related to litigation and regulatory exposures, valuation of DTAs and the fair values of certain assets and liabilities, among other items. If Citi's assumptions or estimates underlying its financial statements are incorrect or differ from actual future events, Citi could experience unexpected losses, some of which could be significant.

Moreover, the Financial Accounting Standards Board (FASB) is currently reviewing, or has proposed or issued, changes to several financial accounting and reporting standards that govern key aspects of Citi's financial statements or interpretations thereof, including those areas where Citi is required to make assumptions or estimates. For example, the FASB has proposed a new accounting model intended to require earlier recognition of credit losses on financial instruments. The proposed accounting model would require that lifetime "expected credit losses" on financial assets not recorded at fair value through net income, such as loans and held-to-maturity securities, be recorded at inception of the financial asset, replacing the multiple existing impairment models under U.S. GAAP which generally require that a loss be "incurred" before it is recognized. For additional information on this and other proposed changes, see Note 1 to the Consolidated Financial Statements.

Changes to financial accounting or reporting standards or interpretations, whether promulgated or required by the FASB or other regulators, could present operational challenges and could require Citi to change certain of the assumptions or estimates it previously used in preparing its financial statements, which could negatively impact how it records and reports its financial condition and results of operations generally and/or with respect to particular businesses. In addition, the FASB is seeking to converge U.S. GAAP with International Financial Reporting Standards (IFRS) to the extent IFRS provides an improvement to accounting standards. Any transition to IFRS could further have a material impact on how Citi records and reports its financial results. For additional information on the key areas for which assumptions and estimates are used in preparing Citi's financial statements, see "Significant Accounting Policies and Significant Estimates" below and Note 28 to the Consolidated Financial Statements.



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Managing Global Risk Table of Contents


MANAGING GLOBAL RISK

65


  Overview

65


    Citi's Risk Management Organization

65


    Citi's Compliance Organization

69


CREDIT RISK (1)

71


   Credit Risk Management

71


   Credit Risk Measurement and Stress Testing

71


   Loans Outstanding

72


   Details of Credit Loss Experience

73


   Allowance for Loan Losses

75


   Non-Accrual Loans and Assets and Renegotiated Loans

76


 North America Consumer Mortgage Lending

80


   Consumer Loan Details

85


   Corporate Credit Details

88


MARKET RISK (1)

91


  Market Risk Management

91


  Funding and Liquidity Risk

91


     Overview

91


     High Quality Liquid Assets

91


     Deposits

92


     Long-Term Debt

93


     Secured Funding Transactions and Short-Term Borrowings

95


     Liquidity Management, Stress Testing and Measurement

96


     Credit Ratings

97


  Price Risk

100


     Price Risk Measurement and Stress Testing

100


     Price Risk-Non-Trading Portfolios (including Interest Rate Exposure)

100


     Price Risk-Trading Portfolios (including VAR)

108


OPERATIONAL RISK

113


     Operational Risk Management

113


     Operational Risk Measurement and Stress Testing

113


COUNTRY AND CROSS-BORDER RISK

114


   Country Risk

115


   Cross-Border Risk

117



(1)

For additional information regarding certain credit risk, market risk and other quantitative and qualitative information, refer to Citi's Pillar 3 Basel III Advanced Approaches Disclosures, as required by the rules of the Federal Reserve Board, on Citi's Investor Relations website.




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MANAGING GLOBAL RISK


Overview

Citigroup believes that effective risk management is of primary importance to its overall operations. Accordingly, Citi's risk management process has been designed to monitor, evaluate and manage the principal risks it assumes in conducting its activities. Specifically, the activities that Citi engages in-and the risks those activities generate-must be consistent with Citi's underlying commitment to the principles of "responsible finance" and in line with Citi's risk appetite. For Citi, responsible finance means conduct that is transparent, prudent and dependable, and that delivers better outcomes for Citi's clients and society. Citi's risk appetite framework includes principle-based qualitative boundaries to guide behavior and quantitative boundaries within which the firm will operate, including capital strength and earnings power.

Citi selectively takes risks in support of its underlying customer-centric business strategy, while striving to ensure it operates within the principles of responsible finance. Reaching the goal of becoming an indisputably strong and stable institution goes beyond financial performance; ethics is an area where Citi has zero tolerance for breaches. Citi evaluates and rewards employees with specific consideration to their risk behaviors, including transparency, communication and escalation of concerns.

Citi's risks are generally categorized into credit risk, market risk, operational risk and country and cross-border risk. Compliance risk can be found in all of these risk types.

Citi's risk programs are based on three lines of defense: (i) business management, (ii) independent control functions and (iii) Internal Audit.


Business Management . Each of Citi's businesses, including in-business risk personnel, own and manage the risks, including compliance risks, inherent in or arising from the business, and are responsible for having controls in place to mitigate key risks, performing manager assessments of internal controls, and promoting a culture of compliance and control.

Independent Control Functions . Citi's independent control functions, including Compliance, Finance, Legal and Risk, set standards according to which Citi and its businesses are expected to manage and oversee risks, including compliance with applicable laws, regulatory requirements, policies and standards of ethical conduct. In addition, among other things, the independent control functions provide advice and training to Citi's businesses and establish tools, methodologies, processes and oversight of controls used by the businesses to foster a culture of compliance and control and to satisfy those standards.

Internal Audit . Citi's Internal Audit function independently reviews activities of the first two lines of defense discussed above based on a risk-based audit plan and methodology approved by the Citigroup Board of Directors.


Citi's Risk Management Organization

Citi's Risk function is an independent control function within Franchise Risk and Strategy. Citi's Chief Risk Officer, with oversight from the Risk Management Committee of the Citigroup Board of Directors, as well as the full Board of Directors, is responsible for:


establishing core standards for the management, measurement and reporting of risk arising from business risk taking activities and the macroeconomic and market environments;

identifying, assessing, communicating and monitoring risks on a company-wide basis;

engaging with senior management on a frequent basis on material matters with respect to risk-taking activities in the businesses and related risk management processes; and

ensuring that the Risk function has adequate independence, authority, expertise, staffing, technology and resources.


As set forth in the chart below, Citi's independent risk management organization is structured to facilitate the management of risk across three dimensions: businesses, regions and critical products.

Each of Citi's major businesses has a Business Chief Risk Officer who is the focal point for risk decisions, such as setting risk limits or approving transactions in the business. The majority of staff in Citi's risk management organization report to these Business Chief Risk Officers. There are also Chief Risk Officers for Citibank, N.A. and the Citi Holdings segment.

Regional Chief Risk Officers, for each of Asia , EMEA and Mexico and Latin America , are accountable for the risks in or affecting their geographic areas, including the legal entities in their region, and are the primary risk contacts for the regional business heads and local regulators.

Citi also has Product Chief Risk Officers for those risk areas of critical importance to Citi, currently fundamental credit, market and real estate risk, treasury, model validation and systemic risks. Product Chief Risk Officers are accountable for the risks within their specialties across businesses and regions. Product Chief Risk Officers also serve as a resource to Citi's Chief Risk Officer, as well as to the Business and Regional Chief Risk Officers, to better enable the Business and Regional Chief Risk Officers to focus on day-to-day management of risks and responsiveness to the business. The Head of the Risk Governance Group ensures the ongoing development, enhancement and implementation of a proactive, prudent, and effective risk management framework and organization.

Each of the Business, Regional, Legal Entity and Product Chief Risk Officers reports to Citi's Chief Risk Officer, who has a direct reporting line to the Risk Management Committee of the Citigroup Board of Directors and a dual reporting line to both Citi's Chief Executive Officer and the Head of Franchise Risk and Strategy.


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Policies and Processes

Citi has established robust processes to oversee the creation, ownership and ongoing management of Citi's risk policy. Specifically, Citi's Chief Risk Officer and the risk management executive committee (as described below), in some cases through established committees:


establish core policies to articulate rules and behaviors for activities where capital is at risk; and

establish policy standards, procedures, guidelines, risk limits and limit adherence processes covering new and current risk exposures across Citi that are aligned with Citi's risk appetite.


Citi's risk management processes include (i) key risk committees, (ii) risk aggregation and stress testing and (iii) risk capital.


Key Risk Committees . Citi has established risk committees across the Company that broadly cover either overall governance, or new or complex product governance:


Risk Management Executive Committee : Citi's Chief Risk Officer chairs this committee. Members include all direct reports of Citi's Chief Risk Officer, as well as certain reports of the Head of Franchise Risk and Strategy. The committee reviews key risk issues across businesses, products and regions.

Citibank, N.A. Risk Committee : Citibank, N.A.'s Chief Risk Officer chairs this committee. Members include the Citibank, N.A Chief Executive Officer, Chief Financial Officer, Treasurer, Chief Compliance Officer, Chief Lending Officer and General Counsel. The committee reviews the risk appetite framework, thresholds and usage against the established thresholds for Citibank, N.A. The committee also reviews reports designed to monitor market, credit, operational and other risk types within the bank.

Business and Regional Consumer Risk Committees : These committees exist in all regions, with broad engagement from the businesses, risk and other control functions. These committees include the Global Consumer Banking Risk Committee , which is chaired by the GCB Chief Executive Officer with the GCB Chief Risk Officer as the vice chair. The committee monitors key performance trends, significant regulatory and control events and management actions.

ICG Risk Management Committee : This committee reviews ICG's risk profile, discusses pertinent risk issues in trading, global transaction services, structuring and lending businesses and reviews strategic risk decisions for consistency with Citi's risk appetite. Members include Citi's Chief Risk Officer and Head of Franchise Risk and Strategy, as well as the Global Head of Markets and the ICG Chief Executive Officer and Chief Risk Officer.

Business Risk, Compliance and Control Committees : These committees, which exist at both sector and function levels, serve as a forum for senior management to review key internal control, legal, compliance, regulatory and other risk and control issues.

Business Practices Committee : This Citi-wide governance committee reviews practices involving potentially significant reputational or franchise issues. Each business also has its own business practices committee. These committees review whether Citi's business practices have been designed and implemented in a way that meets the highest standards of professionalism, integrity and ethical behavior.

Risk Policy Coordination Group : This group ensures a consistent approach to risk policy architecture and risk management requirements across Citi. Members include independent risk representatives from each business, region and Citibank, N.A.


Citi has established the following committees to ensure that product risks are identified, evaluated and determined to be appropriate for Citi and its customers, including the existence of necessary approvals, controls and accountabilities:


New Product Approval Committee : This committee is designed to ensure that significant risks, including reputation and franchise risks, in a new ICG product or service or complex transaction, are identified and evaluated, determined to be appropriate, properly recorded for risk aggregation purposes, effectively controlled, and have accountabilities in place. Functions that participate in this committee's reviews include Legal, Bank Regulatory, Risk, Compliance, Accounting Policy, Product Control, and the Basel Interpretive Committee. Citibank, N.A. management participates in reviews of proposals contemplating the use of bank chain entities.

Consumer Product Approval Committee (CPAC): This committee, which includes senior, multidisciplinary members, approves new products, services, channels or geographies for GCB . Each region has a regional CPAC, and a global CPAC addresses initiatives with high anti-money-laundering (AML) risk or cross-border elements. Members include senior Risk, Legal, Compliance, Bank Regulatory, Operations and Technology and Operational Risk executives, supported by other specialists, including fair lending. A member of Citibank, N.A. senior management also participates in the CPAC process.

Investment Products Risk Committee : This committee oversees two product approval committees that facilitate analysis and discussion of new retail investment products and services created and/or distributed by Citi.

-

Manufacturing Product Approval Committee : This committee has responsibility for reviewing new or modified products or transactions created by Citi that are distributed to individual investors as well as third-party retail distributors.


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-

Distribution Product Approval Committee : This committee approves new investment products and services, including those created by third parties as part of Citi's "open architecture" distribution model, before they are offered to individual investors via Citi distribution businesses (e.g., private bank, consumer, etc.). This committee also sets requirements for the periodic review of existing products and services.

Commercial Bank Product Approval Committee: This committee is designed to ensure that significant risks in a new or complex product, service, business line manufactured or provided by the Consumer and Commercial Bank (CCB) or by third parties for distribution to CCB clients, or certain modifications to existing products, services or business lines, undergo an appropriate and consistent level of review for CCB and its customers and are properly recorded and controlled.


Citi also has other committees that play critical risk management roles, such as Citi's Asset and Liability Committee (ALCO) and the Operational Risk Council. For example, Citi's ALCO sets the strategy of the liquidity portfolio and monitors its performance, including approving significant changes to portfolio asset allocations.


Risk Aggregation and Stress Testing

While Citi's major risk areas are discussed individually on the following pages, these risks are also reviewed and managed in conjunction with one another and across Citi's various businesses via its risk aggregation and stress testing processes. Moreover, Citi has established a formal policy governing its global systemic stress testing.

As noted above, independent risk management monitors and controls major risk exposures and concentrations across the organization. This requires the aggregation of risks, within and across businesses, as well as subjecting those risks to various stress scenarios in order to assess the potential economic impact they may have on Citi.

Stress tests are in place across Citi's entire portfolio (i.e., trading, available-for-sale and accrual portfolios). These company-wide stress reports measure the potential impact to Citi and its component businesses of changes in various types of key risk factors (e.g., interest rates, credit spreads, etc.). The reports also measure the potential impact of a number of historical and hypothetical forward-looking systemic stress scenarios, as developed internally by independent risk management. These company-wide stress tests are produced on a monthly basis, and results are reviewed by Citi's senior management and Board of Directors.

Supplementing the stress testing described above, independent risk management, with assistance from its businesses and Finance function, provides periodic updates to Citi's senior management and Board of Directors on significant potential areas of concern across Citi that can arise from risk concentrations, financial market participants and other systemic issues. These areas of focus are intended to be forward-looking assessments of the potential economic impacts to Citi that may arise from these exposures.

The stress-testing and focus-position exercises described above supplement the standard limit-setting and risk-capital exercises described below, as these processes incorporate events in the marketplace and within Citi that impact the firm's outlook on the form, magnitude, correlation and timing of identified risks that may arise. In addition to enhancing awareness and understanding of potential exposures, the results of these processes then serve as the starting point for developing risk management and mitigation strategies.

In addition to Citi's ongoing, internal stress testing described above, Citi is also required to perform stress testing on a periodic basis for a number of regulatory exercises, including the Federal Reserve Board's Comprehensive Capital Analysis and Review (CCAR) and the OCC's Dodd-Frank Act Stress Testing (DFAST). These regulatory exercises typically prescribe certain defined scenarios under which stress testing should be conducted, and they also provide defined forms for the output of the results. For additional information, see "Risk Factors-Business and Operational Risks" above.


Risk Capital

Citi calculates and allocates risk capital across the Company in order to consistently measure risk taking across business activities and to assess risk-reward relationships. Risk capital is defined as the amount of capital required to absorb potential unexpected economic losses resulting from extremely severe events over a one-year time period.


"Economic losses" include losses that are reflected on Citi's Consolidated Statements of Income and fair value adjustments to the Consolidated Financial Statements, as well as any further declines in value not captured on the Consolidated Statements of Income.

"Unexpected losses" are the difference between potential extremely severe losses and Citi's expected (average) loss over a one-year time period.

"Extremely severe" is defined as potential loss at a 99.97% confidence level, based on the distribution of observed events and scenario analysis.


The drivers of economic losses are risks which, for Citi, are broadly categorized as credit risk, market risk and operational risk. Citi's risk capital framework is reviewed and enhanced on a regular basis in light of market developments and evolving practices.





68



Citi's Compliance Organization

Compliance is an independent control function within Franchise Risk and Strategy that is designed to protect Citi not only by managing adherence to applicable laws, regulations and other standards of conduct, but also by promoting business behavior and activity that is consistent with global standards for responsible finance.

While principal responsibility for compliance rests with business managers and their teams, all employees of Citi are responsible for protecting the franchise by (i) engaging in responsible finance; (ii) understanding and adhering to the compliance requirements that apply to their day-to-day activities, including Citi's Code of Conduct and other Citi policies, standards and procedures; and (iii) seeking advice from the Compliance function with questions regarding compliance requirements and promptly reporting violations of laws, rules, regulations, Citi policies or relevant ethical standards. Citi's compliance risk management starts with Citi's Board of Directors and senior management, who set the tone from the top by promoting a strong culture of ethics, compliance and control.

Citi's compliance program is based on the three lines of defense, as described above.


Compliance Risk Appetite Framework

Guided by the principle of responsible finance, Citi seeks to eliminate, minimize, or mitigate compliance risk. Compliance risk is the risk arising from violations of, or non-conformance with, local, national, or cross-border laws, rules, or regulations, Citi's own internal policies and procedures, or relevant ethical standards.

Citi manages its compliance risk appetite through a three-pillar approach:


Setting risk appetite : Citi establishes its compliance risk appetite by setting limits on the types of business in which Citi will engage, the products and services Citi will offer, the types of customers which Citi will service, the counterparties with which Citi will deal, and the locations where Citi will do business. These limits are guided by adherence to the highest ethical standards.

Adhering to risk appetite : Citi manages adherence to its compliance risk appetite through the execution of its compliance program, which includes customer onboarding processes, product development processes, transaction monitoring processes, conduct risk program, ethics program, and new products, services, and complex transactions approval processes.

Evaluating the effectiveness of risk appetite controls : The business and compliance evaluate the effectiveness of controls governing compliance risk appetite through the Manager's Control Assessment (MCA) processes; compliance testing; compliance monitoring processes; compliance risk assessments; compliance metrics related to key operating risks, key risk indicators and control effectiveness indicators; and the Internal Audit function.


The elements supporting these three pillars are discussed in greater detail below.

Citi's Compliance Function

Compliance aims to execute Citi's compliance risk appetite framework-and thus eliminate, minimize, or manage compliance risk-through Citi's compliance program. To achieve this mission, the Compliance function seeks to:


Understand the regulatory environment, requirements and expectations to which Citi's activities are subject. Compliance coordinates with Legal and other independent control functions, as appropriate, to identify, communicate and document key regulatory requirements.

Assess the compliance risks of business activities and the state of mitigating controls, including the risks and controls in legal entities in which activity is conducted. To facilitate the identification and assessment of compliance risk, Compliance works with the businesses and other independent control functions to review significant compliance and regulatory issues and the results of testing, monitoring, and internal and external exams and audits.

In conjunction with Citi's Board of Directors and senior management, define Citi's appetite for prudent compliance and regulatory risk consistent with its culture for compliance, control and responsible finance.

As noted above, Citi has developed a compliance risk appetite framework designed to eliminate, minimize or mitigate compliance risk.

Develop controls and execute programs reasonably designed to limit conduct to that consistent with Citi's compliance and regulatory risk appetite and promptly detect and mitigate behavior that violates those limits. Compliance has business-specific compliance functions (e.g., Global Consumer Banking and Institutional Clients Group ), regional programs, and thematic groups and programs ( e.g., the AML Program and the Conduct, Governance, and Emerging Risk Management group) that aim to mitigate Citi's exposure to conduct that is inconsistent with its compliance risk appetite.

Detect, report on, escalate and remediate key compliance and franchise risks and control issues; test controls for design and operating effectiveness, promptly address issues, and track remediation efforts .

Compliance designs and implements policies, standards, procedures, guidelines, surveillance reports and other solutions for use by the business and compliance to promptly detect, address and remediate issues, test controls for design and operating effectiveness, and track remediation efforts.


69



Engage with the Board, business management, operating committees and Citi's regulators to foster effective global governance . Compliance provides regular reports on emerging risks and other issues and their implications for Citi, as well as compliance program performance, to the Citigroup and Citibank, N.A. Boards of Directors, including the Audit and Ethics and Culture Committees, as well as other committees of the Boards.

Compliance also engages with business management on an ongoing basis through various mechanisms, including governance committees, and it supports and advises the businesses and other global functions in managing regulatory relationships.

Advise and train Citi personnel across businesses, functions, regions and legal entities in how to comply with laws, regulations and other standards of conduct . Compliance helps promote a strong culture of compliance and control by increasing awareness and capability across Citi on key compliance issues through training and communication programs. A fundamental element of Citi's culture is the requirement that Citi conducts itself in accordance with the highest standards of ethical behavior. Compliance plays a key role in developing company-wide initiatives designed to further embed ethics in Citi's culture. These initiatives include training for more than 40,000 senior employees that fosters ethical decision-making and underscores the importance of escalating issues. The initiatives also include a video series featuring senior leaders discussing difficult ethical decisions, regular communications on ethics and culture, and the development of enhanced tools to support ethical decision-making. Compliance partners with the businesses and other functions to develop and implement these and other ethics and culture initiatives.

Enhance the Compliance Program .

Compliance fulfills its obligation to enhance the compliance program in part by using its annual compliance risk assessment results to shape annual and multi-year program enhancements.


Organization Structure and Staff Independence

Citi's Chief Compliance Officer manages the Compliance function. The Chief Compliance Officer or a designee is responsible for reporting significant compliance matters to Citi's senior management, the Boards of Directors, their designated committees, and other relevant forums.

Citi's Chief Compliance Officer reports to the Head of Franchise Risk and Strategy, who reports directly to Citi's Chief Executive Officer. All compliance officers report directly to Citi's Chief Compliance Officer through one of the above mentioned direct reports. This structure provides the required independence of Compliance from the revenue-producing lines of business.












70



CREDIT RISK


Credit risk is the potential for financial loss resulting from the failure of a borrower or counterparty to honor its financial or contractual obligations. Credit risk arises in many of Citigroup's business activities, including:


wholesale and retail lending;

capital markets derivative transactions;

structured finance; and

repurchase and reverse repurchase transactions.


Credit risk also arises from settlement and clearing activities, when Citi transfers an asset in advance of receiving its counter-value or advances funds to settle a transaction on behalf of a client. Concentration risk, within credit risk, is the risk associated with having credit exposure concentrated within a specific client, industry, region or other category.


Credit Risk Management

Credit risk is one of the most significant risks Citi faces as an institution. As a result, Citi has a well established framework in place for managing credit risk across all businesses. This includes a defined risk appetite, credit limits and credit policies, both at the business level as well as at the company-wide level. Citi's credit risk management also includes processes and policies with respect to problem recognition, including "watch lists," portfolio review, updated risk ratings and classification triggers.

With respect to Citi's settlement and clearing activities, intra-day client usage of lines is closely monitored against limits, as well as against "normal" usage patterns. To the extent a problem develops, Citi typically moves the client to a secured (collateralized) operating model. Generally, Citi's intra-day settlement and clearing lines are uncommitted and cancellable at any time.

To manage concentration of risk within credit risk, Citi has in place a concentration management framework consisting of industry limits, obligor limits and single-name triggers. In addition, as noted under "Managing Global Risk-Risk Aggregation and Stress Testing" above, independent risk management reviews concentration of risk across Citi's regions and businesses to assist in managing this type of risk.


Credit Risk Measurement and Stress Testing

Credit exposures are generally reported in notional terms for accrual loans, reflecting the value at which the loans as well as loan and other off-balance sheet commitments are carried on the Consolidated Balance Sheet. Credit exposure arising from capital markets activities is generally expressed as the current mark-to-market, net of margin, reflecting the net value owed to Citi by a given counterparty.

The credit risk associated with these credit exposures is a function of the creditworthiness of the obligor, as well as the terms and conditions of the specific obligation. Citi assesses the credit risk associated with its credit exposures on a regular basis through its loan loss reserve process (see "Significant Accounting Policies and Significant Estimates" and Notes 1 and 16 to the Consolidated Financial Statements), as well as through regular stress testing at the company, business, geography and product levels. These stress-testing processes typically estimate potential incremental credit costs that would occur as a result of either downgrades in the credit quality or defaults of the obligors or counterparties.



71



Loans Outstanding

December 31,

In millions of dollars

2014

2013

2012

2011

2010

Consumer loans



In U.S. offices



Mortgage and real estate (1)

$

96,533


$

108,453


$

125,946


$

139,177


$

151,469


Installment, revolving credit, and other

14,450


13,398


14,070


15,616


28,291


Cards

112,982


115,651


111,403


117,908


122,384


Commercial and industrial

5,895


6,592


5,344


4,766


5,021


Lease financing

-


-


-


1


2



$

229,860


$

244,094


$

256,763


$

277,468


$

307,167


In offices outside the U.S.

Mortgage and real estate (1)

$

54,462


$

55,511


$

54,709


$

52,052


$

52,175


Installment, revolving credit, and other

31,128


33,182


33,958


32,673


36,132


Cards

32,032


36,740


40,653


38,926


40,948


Commercial and industrial

22,561


24,107


22,225


21,915


18,028


Lease financing

609


769


781


711


665



$

140,792


$

150,309


$

152,326


$

146,277


$

147,948


Total Consumer loans

$

370,652


$

394,403


$

409,089


$

423,745


$

455,115


Unearned income

(682

)

(572

)

(418

)

(405

)

69


Consumer loans, net of unearned income

$

369,970


$

393,831


$

408,671


$

423,340


$

455,184


Corporate loans



In U.S. offices



Commercial and industrial

$

35,055


$

32,704


$

26,985


$

20,830


$

13,669


Loans to financial institutions

36,272


25,102


18,159


15,113


8,995


Mortgage and real estate (1)

32,537


29,425


24,705


21,516


19,770


Installment, revolving credit, and other

29,207


34,434


32,446


33,182


34,046


Lease financing

1,758


1,647


1,410


1,270


1,413



$

134,829


$

123,312


$

103,705


$

91,911


$

77,893


In offices outside the U.S.



Commercial and industrial

$

79,239


$

82,663


$

82,939


$

79,764


$

72,166


Loans to financial institutions

33,269


38,372


37,739


29,794


22,620


Mortgage and real estate (1)

6,031


6,274


6,485


6,885


5,899


Installment, revolving credit, and other

19,259


18,714


14,958


14,114


11,829


Lease financing

356


527


605


568


531


Governments and official institutions

2,236


2,341


1,159


1,576


3,644



$

140,390


$

148,891


$

143,885


$

132,701


$

116,689


Total Corporate loans

$

275,219


$

272,203


$

247,590


$

224,612


$

194,582


Unearned income

(554

)

(562

)

(797

)

(710

)

(972

)

Corporate loans, net of unearned income

$

274,665


$

271,641


$

246,793


$

223,902


$

193,610


Total loans-net of unearned income

$

644,635


$

665,472


$

655,464


$

647,242


$

648,794


Allowance for loan losses-on drawn exposures

(15,994

)

(19,648

)

(25,455

)

(30,115

)

(40,655

)

Total loans-net of unearned income and allowance for credit losses

$

628,641


$

645,824


$

630,009


$

617,127


$

608,139


Allowance for loan losses as a percentage of total loans-net of unearned income (2)

2.50

%

2.97

%

3.92

%

4.69

%

6.31

%

Allowance for Consumer loan losses as a percentage of total Consumer loans-net of unearned income (2)

3.68

%

4.34

%

5.57

%

6.45

%

7.81

%

Allowance for Corporate loan losses as a percentage of total Corporate loans-net of unearned income (2)

0.89

%

0.97

%

1.14

%

1.31

%

2.75

%

(1)

Loans secured primarily by real estate.

(2)

All periods exclude loans that are carried at fair value.


72



Details of Credit Loss Experience

In millions of dollars

2014

2013

2012

2011

2010

Allowance for loan losses at beginning of period

$

19,648


$

25,455


$

30,115


$

40,655


$

36,033


Provision for loan losses

Consumer

$

6,693


$

7,603


$

10,371


$

12,075


$

24,886


Corporate

135


1


87


(739

)

75


$

6,828


$

7,604


$

10,458


$

11,336


$

24,961


Gross credit losses

Consumer

In U.S. offices (1)(2)

$

6,780


$

8,402


$

12,226


$

15,767


$

24,183


In offices outside the U.S. 

3,901


3,998


4,139


4,932


6,548


Corporate

Commercial and industrial, and other

In U.S. offices

66


125


154


392


1,222


In offices outside the U.S. 

283


144


305


649


571


Loans to financial institutions

In U.S. offices

2


2


33


215


275


In offices outside the U.S. 

13


7


68


391


111


Mortgage and real estate

In U.S offices

8


62


59


182


953


In offices outside the U.S.

55


29


21


171


286


$

11,108


$

12,769


$

17,005


$

22,699


$

34,149


Credit recoveries (3)

Consumer

In U.S. offices

$

1,122


$

1,073


$

1,302


$

1,467


$

1,323


In offices outside the U.S. 

874


1,065


1,055


1,159


1,209


Corporate

Commercial & industrial, and other

In U.S offices

64


62


243


175


591


In offices outside the U.S. 

63


52


95


93


115


Loans to financial institutions

In U.S. offices

1


1


-


-


-


In offices outside the U.S. 

11


20


43


89


132


Mortgage and real estate

In U.S offices

-


31


17


27


130


In offices outside the U.S. 

-


2


19


2


26


$

2,135


$

2,306


$

2,774


$

3,012


$

3,526


Net credit losses

In U.S. offices (1)(2)

$

5,669


$

7,424


$

10,910


$

14,887


$

24,589


In offices outside the U.S. 

3,304


3,039


3,321


4,800


6,034


Total

$

8,973


$

10,463


$

14,231


$

19,687


$

30,623


Other - net (4)(5)(6)(7)(8)(9)

$

(1,509

)

$

(2,948

)

$

(887

)

$

(2,189

)

$

10,284


Allowance for loan losses at end of period

$

15,994


$

19,648


$

25,455


$

30,115


$

40,655


Allowance for loan losses as a % of total loans (10)

2.50

%

2.97

%

3.92

%

4.69

%

6.31

%

Allowance for unfunded lending commitments (11)

$

1,063


$

1,229


$

1,119


$

1,136


$

1,066


Total allowance for loan losses and unfunded lending commitments

$

17,057


$

20,877


$

26,574


$

31,251


$

41,721


Net Consumer credit losses (1)(2)

$

8,685


$

10,262


$

14,008


$

18,073


$

28,199


As a percentage of average Consumer loans

2.28

%

2.63

%

3.43

%

4.15

%

5.72

%

Net Corporate credit losses

$

288


$

201


$

223


$

1,614


$

2,424


As a percentage of average Corporate loans

0.10

%

0.08

%

0.09

%

0.79

%

1.27

%


73



Allowance for loan losses at end of period (12)

Citicorp

$

11,465


$

13,174


$

14,623


$

16,699


$

22,366


Citi Holdings

4,529


6,474


10,832


13,416


18,289


Total Citigroup

$

15,994


$

19,648


$

25,455


$

30,115


$

40,655


Allowance by type

Consumer

$

13,605


$

17,064


$

22,679


$

27,236


$

35,406


Corporate

2,389


2,584


2,776


2,879


5,249


Total Citigroup

$

15,994


$

19,648


$

25,455


$

30,115


$

40,655


(1)

2012 includes approximately $635 million of incremental charge-offs related to the Office of the Comptroller of the Currency (OCC) guidance issued in the third quarter of 2012, which required mortgage loans to borrowers that have gone through Chapter 7 U.S. Bankruptcy Code to be written down to collateral value. There was a corresponding approximate $600 million release in the third quarter of 2012 allowance for loans losses related to these charge-offs. 2012 also includes a benefit to charge-offs of approximately $40 million related to finalizing the impact of the OCC guidance in the fourth quarter of 2012.

(2)

2012 includes approximately $370 million of incremental charge-offs related to previously deferred principal balances on modified loans in the first quarter of 2012. These charge-offs were related to anticipated forgiveness of principal in connection with the national mortgage settlement. There was a corresponding approximate $350 million reserve release in the first quarter of 2012 related to these charge-offs.

(3)

Recoveries have been reduced by certain collection costs that are incurred only if collection efforts are successful.

(4)

Includes all adjustments to the allowance for credit losses, such as changes in the allowance from acquisitions, dispositions, securitizations, foreign currency translation, purchase accounting adjustments, etc.

(5)

2014 includes reductions of approximately $1.1 billion related to the sale or transfer to held-for-sale (HFS) of various loan portfolios, which includes approximately $411 million related to the transfer of various real estate loan portfolios to HFS, approximately $204 million related to the transfer to HFS of a business in Greece, approximately $177 million related to the transfer to HFS of a business in Spain, approximately $29 million related to the transfer to HFS of a business in Honduras and approximately $108 million related to the transfer to HFS of various EMEA loan portfolios. Additionally, 2014 includes a reduction of approximately $463 million related to foreign currency translation.

(6)

2013 includes reductions of approximately $2.4 billion related to the sale or transfer to held-for-sale of various loan portfolios, which includes approximately $360 million related to the sale of Credicard and approximately $255 million related to a transfer to held-for-sale of a loan portfolio in Greece, approximately $230 million related to a non-provision transfer of reserves associated with deferred interest to Other assets which includes deferred interest and approximately $220 million related to foreign currency translation.

(7)

2012 includes reductions of approximately $875 million related to the sale or transfer to held-for-sale of various U.S. loan portfolios.

(8)

2011 includes reductions of approximately $1.6 billion related to the sale or transfer to held-for-sale of various U.S. loan portfolios, approximately $240 million related to the sale of the Egg Banking PLC credit card business, approximately $72 million related to the transfer of the Citi Belgium business to held-for-sale and approximately $290 million related to FX translation.

(9)

2010 primarily includes an addition of $13.4 billion related to the impact of consolidating entities in connection with Citi's adoption of SFAS 166/167, reductions of approximately $2.7 billion related to the sale or transfer to held-for-sale of various U.S. loan portfolios and approximately $290 million related to the transfer of a U.K. first mortgage portfolio to held-for-sale.

(10)

December 31, 2014, December 31, 2013, December 31, 2012, December 31, 2011 and December 31, 2010 exclude $5.9 billion, $5.0 billion, $5.3 billion, $5.3 billion and $4.4 billion, respectively, of loans which are carried at fair value.

(11)

Represents additional credit loss reserves for unfunded lending commitments and letters of credit recorded in Other liabilities on the Consolidated Balance Sheet.

(12)

Allowance for loan losses represents management's best estimate of probable losses inherent in the portfolio, as well as probable losses related to large individually evaluated impaired loans and troubled debt restructurings. See "Significant Accounting Policies and Significant Estimates" and Note 1 to the Consolidated Financial Statements below. Attribution of the allowance is made for analytical purposes only and the entire allowance is available to absorb probable credit losses inherent in the overall portfolio.



74



Allowance for Loan Losses

The following tables detail information on Citi's allowance for loan losses, loans and coverage ratios as of December 31, 2014 and December 31, 2013 :

December 31, 2014

In billions of dollars

Allowance for

loan losses

Loans, net of

unearned income

Allowance as a

percentage of loans (1)

North America  cards (2)

$

4.9


$

114.0


4.3

%

North America  mortgages (3)(4)

3.7


95.9


3.9


North America  other

1.2


21.6


5.6


International cards

1.9


31.5


6.0


International other (5)

1.9


106.9


1.8


Total Consumer

$

13.6


$

369.9


3.7

%

Total Corporate

2.4


274.7


0.9


Total Citigroup

$

16.0


$

644.6


2.5

%

(1)

Allowance as a percentage of loans excludes loans that are carried at fair value.

(2)

Includes both Citi-branded cards and Citi retail services. The $4.9 billion of loan loss reserves represented approximately 15 months of coincident net credit loss coverage.

(3)

Of the $3.7 billion, approximately $3.5 billion was allocated to North America mortgages in Citi Holdings. The $3.7 billion of loan loss reserves represented approximately 53 months of coincident net credit loss coverage (for both total North America mortgages and Citi Holdings North America mortgages).

(4)

Of the $3.7 billion in loan loss reserves, approximately $1.2 billion and $2.5 billion are determined in accordance with ASC 450-20 and ASC 310-10-35 (troubled debt restructurings), respectively. Of the $95.9 billion in loans, approximately $80.4 billion and $15.2 billion of the loans are evaluated in accordance with ASC 450-20 and ASC 310-10-35 (troubled debt restructurings), respectively. For additional information, see Note 16 to the Consolidated Financial Statements.

(5)

Includes mortgages and other retail loans.


December 31, 2013

In billions of dollars

Allowance for

loan losses

Loans, net of

unearned income

Allowance as a

percentage of loans (1)

North America  cards (2)

$

6.2


$

116.8


5.3

%

North America  mortgages (3)(4)

5.1


107.5


4.8


North America  other

1.2


21.9


5.4


International cards

2.3


36.2


6.5


International other (5)

2.2


111.4


2.0


Total Consumer

$

17.0


$

393.8


4.3

%

Total Corporate

2.6


271.7


1.0


Total Citigroup

$

19.6


$

665.5


3.0

%

(1)

Allowance as a percentage of loans excludes loans that are carried at fair value.

(2)

Includes both Citi-branded cards and Citi retail services. The $6.2 billion of loan loss reserves represented approximately 18 months of coincident net credit loss coverage.

(3)

Of the $5.1 billion, approximately $4.9 billion was allocated to North America mortgages in Citi Holdings. The $5.1 billion of loan loss reserves represented approximately 26 months of coincident net credit loss coverage (for both total North Americ a mortgages and Citi Holdings North America mortgages).

(4)

Of the $5.1 billion in loan loss reserves, approximately $2.4 billion and $2.7 billion are determined in accordance with ASC 450-20 and ASC 310-10-35 (troubled debt restructurings), respectively. Of the $107.5 billion in loans, approximately $88.6 billion and $18.5 billion of the loans are evaluated in accordance with ASC 450-20 and ASC 310-10-35 (troubled debt restructurings), respectively. For additional information, see Note 16 to the Consolidated Financial Statements.

(5)

Includes mortgages and other retail loans.


75



Non-Accrual Loans and Assets and Renegotiated Loans

The following pages include information on Citi's "Non-Accrual Loans and Assets" and "Renegotiated Loans." There is a certain amount of overlap among these categories. The following summary provides a general description of each category:


Non-Accrual Loans and Assets:

Corporate and consumer (commercial market) non-accrual status is based on the determination that payment of interest or principal is doubtful.

Consumer non-accrual status is generally based on aging, i.e., the borrower has fallen behind in payments.

Mortgage loans in regulated bank entities discharged through Chapter 7 bankruptcy, other than Federal Housing Administration (FHA) insured loans, are classified as non-accrual. Non-bank mortgage loans discharged through Chapter 7 bankruptcy are classified as non-accrual at 90 days or more past due. In addition, home equity loans in regulated bank entities are classified as non-accrual if the related residential first mortgage loan is 90 days or more past due.

North America Citi-branded cards and Citi retail services are not included because under industry standards, credit card loans accrue interest until such loans are charged off, which typically occurs at 180 days contractual delinquency.

Renegotiated Loans:

Includes both corporate and consumer loans whose terms have been modified in a troubled debt restructuring (TDR).

Includes both accrual and non-accrual TDRs.


Non-Accrual Loans and Assets

The table below summarizes Citigroup's non-accrual loans as of the periods indicated. Non-accrual loans may still be current on interest payments. In situations where Citi reasonably expects that only a portion of the principal owed will ultimately be collected, all payments received are reflected as a reduction of principal and not as interest income. For all other non-accrual loans, cash interest receipts are generally recorded as revenue.


76



Non-Accrual Loans

December 31,

In millions of dollars

2014

2013

2012

2011

2010

Citicorp

$

3,062


$

3,791


$

4,096


$

4,018


$

4,909


Citi Holdings

4,045


5,212


7,434


7,050


14,498


Total non-accrual loans

$

7,107


$

9,003


$

11,530


$

11,068


$

19,407


Corporate non-accrual loans (1)



North America

$

321


$

736


$

735


$

1,246


$

2,112


EMEA

267


766


1,131


1,293


5,337


Latin America

416


127


128


362


701


Asia

179


279


339


335


470


Total Corporate non-accrual loans

$

1,183


$

1,908


$

2,333


$

3,236


$

8,620


Citicorp

$

1,126


$

1,580


$

1,909


$

2,217


$

3,091


Citi Holdings

57


328


424


1,019


5,529


Total Corporate non-accrual loans

$

1,183


$

1,908


$

2,333


$

3,236


$

8,620


Consumer non-accrual loans (1)

North America

$

4,412


$

5,238


$

7,149


$

5,888


$

8,540


EMEA

32


138


380


387


652


Latin America

1,188


1,426


1,285


1,107


1,019


Asia

292


293


383


450


576


Total Consumer non-accrual loans

$

5,924


$

7,095


$

9,197


$

7,832


$

10,787


Citicorp

$

1,936


$

2,211


$

2,187


$

1,801


$

1,818


Citi Holdings

3,988


4,884


7,010


6,031


8,969


Total Consumer non-accrual loans

$

5,924


$

7,095


$

9,197


$

7,832


$

10,787


(1)

Excludes purchased distressed loans, as they are generally accreting interest. The carrying value of these loans was $ 421 million at December 31, 2014 , $ 703 million at December 31, 2013 , $537 million at December 31, 2012 , $511 million at December 31, 2011 , and $469 million at December 31, 2010 .



77



The table below summarizes Citigroup's other real estate owned (OREO) assets as of the periods indicated. This represents the carrying value of all real estate property acquired by foreclosure or other legal proceedings when Citi has taken possession of the collateral.

December 31,

In millions of dollars

2014

2013

2012

2011

2010

OREO (1)

Citicorp

$

96


$

79


$

49


$

86


$

840


Citi Holdings

164


338


391


480


863


Total OREO

$

260


$

417


$

440


$

566


$

1,703


North America

$

195


$

305


$

299


$

441


$

1,440


EMEA

8


59


99


73


161


Latin America

47


47


40


51


47


Asia

10


6


2


1


55


Total OREO

$

260


$

417


$

440


$

566


$

1,703


Other repossessed assets

$

-


$

-


$

1


$

1


$

28


Non-accrual assets-Total Citigroup



Corporate non-accrual loans

$

1,183


$

1,908


$

2,333


$

3,236


$

8,620


Consumer non-accrual loans

5,924


7,095


9,197


7,832


10,787


Non-accrual loans (NAL)

$

7,107


$

9,003


$

11,530


$

11,068


$

19,407


OREO

$

260


$

417


$

440


$

566


$

1,703


Other repossessed assets

-


-


1


1


28


Non-accrual assets (NAA)

$

7,367


$

9,420


$

11,971


$

11,635


$

21,138


NAL as a percentage of total loans

1.10

%

1.35

%

1.76

%

1.71

%

2.99

%

NAA as a percentage of total assets

0.40


0.50


0.64


0.62


1.10


Allowance for loan losses as a percentage of NAL (2)

225


218


221


272


209



Non-accrual assets-Total Citicorp

2014

2013

2012

2011

2010

Non-accrual loans (NAL)

$

3,062


$

3,791


$

4,096


$

4,018


$

4,909


OREO

96


79


49


86


840


Other repossessed assets

N/A


N/A


N/A


N/A


N/A


Non-accrual assets (NAA)

$

3,158


$

3,870


$

4,145


$

4,104


$

5,749


NAA as a percentage of total assets

0.18

%

0.22

%

0.24

%

0.25

%

0.36

%

Allowance for loan losses as a percentage of NAL (2)

374


348


357


416


456


Non-accrual assets-Total Citi Holdings



Non-accrual loans (NAL)

$

4,045


$

5,212


$

7,434


$

7,050


$

14,498


OREO

164


338


391


480


863


Other repossessed assets

N/A


N/A


N/A


N/A


N/A


Non-accrual assets (NAA)

$

4,209


$

5,550


$

7,825


$

7,530


$

15,361


NAA as a percentage of total assets

4.29

%

4.74

%

5.02

%

3.35

%

4.91

%

Allowance for loan losses as a percentage of NAL (2)

112


124


146


190


126


(1)

2014 reflects a decrease of $130 million related to the adoption of ASU 2014-14, which requires certain government guaranteed mortgage loans to be recognized as separate other receivables upon foreclosure. Prior periods have not been restated. For additional information, see Note 1 of the Consolidated Financial Statements.

(2)

The allowance for loan losses includes the allowance for Citi's credit card portfolios and purchased distressed loans, while the non-accrual loans exclude credit card balances (with the exception of certain international portfolios) and purchased distressed loans as these continue to accrue interest until charge-off.

N/A Not available at the Citicorp or Citi Holdings level.


78



Renegotiated Loans

The following table presents Citi's loans modified in TDRs.

In millions of dollars

Dec. 31, 2014

Dec. 31, 2013

Corporate renegotiated loans (1)

In U.S. offices

Commercial and industrial (2)

$

12


$

36


Mortgage and real estate (3)

106


143


Loans to financial institutions

-


14


Other

316


364


$

434


$

557


In offices outside the U.S.

Commercial and industrial (2)

$

105


$

161


Mortgage and real estate (3)

1


18


Other

39


58


$

145


$

237


Total Corporate renegotiated loans

$

579


$

794


Consumer renegotiated loans (4)(5)(6)(7)

In U.S. offices

Mortgage and real estate (8)

$

15,514


$

18,922


Cards

1,751


2,510


Installment and other

580


626


$

17,845


$

22,058


In offices outside the U.S.

Mortgage and real estate

$

695


$

641


Cards

656


830


Installment and other

586


834


$

1,937


$

2,305


Total Consumer renegotiated loans

$

19,782


$

24,363


(1)

Includes $135 million and $312 million of non-accrual loans included in the non-accrual assets table above at December 31, 2014 and December 31, 2013, respectively. The remaining loans are accruing interest.

(2)

In addition to modifications reflected as TDRs at December 31, 2014 , Citi also modified $15 million and $34 million of commercial loans risk rated "Substandard Non-Performing" or worse (asset category defined by banking regulators) in offices inside and outside the U.S., respectively. These modifications were not considered TDRs because the modifications did not involve a concession (a required element of a TDR for accounting purposes).

(3)

In addition to modifications reflected as TDRs at December 31, 2014 , Citi also modified $22 million of commercial real estate loans risk rated "Substandard Non-Performing" or worse (asset category defined by banking regulators) in offices inside the U.S. These modifications were not considered TDRs because the modifications did not involve a concession (a required element of a TDR for accounting purposes).

(4)

Includes $3,132 million and $3,637 million of non-accrual loans included in the non-accrual assets table above at December 31, 2014 and 2013 , respectively. The remaining loans are accruing interest.

(5)

Includes $124 million and $29 million of commercial real estate loans at December 31, 2014 and 2013 , respectively.

(6)

Includes $184 million and $295 million of other commercial loans at December 31, 2014 and 2013 , respectively.

(7)

Smaller-balance homogeneous loans were derived from Citi's risk management systems.

(8)

Reduction in 2014 includes $2,901 million related to TDRs sold or transferred to held-for-sale.






Forgone Interest Revenue on Loans (1)

In millions of dollars

In U.S.

offices

In non-

U.S.

offices

2014

total

Interest revenue that would have been accrued at original contractual rates  (2)

$

1,708


$

715


$

2,423


Amount recognized as interest revenue (2)

996


261


1,257


Forgone interest revenue

$

712


$

454


$

1,166



(1)

Relates to Corporate non-accrual loans, renegotiated loans and Consumer loans on which accrual of interest has been suspended.

(2)

Interest revenue in offices outside the U.S. may reflect prevailing local interest rates, including the effects of inflation and monetary correction in certain countries.




79



North America Consumer Mortgage Lending


Overview

Citi's North America consumer mortgage portfolio consists of both residential first mortgages and home equity loans. At December 31, 2014 , Citi's North America consumer mortgage portfolio was $95.9 billion (compared to $107.5 billion at December 31, 2013), of which the residential first mortgage portfolio was $67.8 billion (compared to $75.9 billion at December 31, 2013), and the home equity loan portfolio was $28.1 billion (compared to $31.6 billion at December 31, 2013). At December 31, 2014 , $34.4 billion of first mortgages was recorded in Citi Holdings, with the remaining $33.4 billion recorded in Citicorp. At December 31, 2014 , $24.8 billion of home equity loans was recorded in Citi Holdings, with the remaining $3.3 billion recorded in Citicorp.

Citi's residential first mortgage portfolio included $5.2 billion of loans with FHA insurance or Department of Veterans Affairs (VA) guarantees at December 31, 2014 , compared to $7.7 billion at December 31, 2013. The decline during the year was primarily attributed to approximately $2.3 billion of mortgage loans with FHA insurance sold and transferred to held-for-sale, including $0.9 billion during the fourth quarter of 2014. Citi's FHA/VA portfolio consists of loans to low-to-moderate-income borrowers with lower FICO (Fair Isaac Corporation) scores and generally higher loan-to-value ratios (LTVs). Credit losses on FHA loans are borne by the sponsoring governmental agency, provided that the insurance terms have not been rescinded as a result of an origination defect. With respect to VA loans, the VA establishes a loan-level loss cap, beyond which Citi is liable for loss. While FHA and VA loans have high delinquency rates, given the insurance and guarantees, respectively, Citi has experienced negligible credit losses on these loans.



In addition, Citi's residential first mortgage portfolio included $0.8 billion of loans with origination LTVs above 80% that have insurance through mortgage insurance companies at December 31, 2014 , compared to $1.1 billion at December 31, 2013. At December 31, 2014 , the residential first mortgage portfolio also had $0.6 billion of loans subject to long-term standby commitments (LTSCs) with U.S. government-sponsored entities (GSEs) for which Citi has limited exposure to credit losses, compared to $0.8 billion at December 31, 2013. At December 31, 2014 , Citi's home equity loan portfolio also included $0.2 billion of loans subject to LTSCs with GSEs, compared to $0.3 billion at December 31, 2013, for which Citi also has limited exposure to credit losses. These guarantees and commitments may be rescinded in the event of loan origination defects. Citi's allowance for loan loss calculations takes into consideration the impact of the guarantees and commitments described above.

As of December 31, 2014 , Citi's North America residential first mortgage portfolio contained approximately $3.8 billion of adjustable rate mortgages that are currently required to make a payment consisting of only accrued interest for the payment period, or an interest-only payment, compared to $5.0 billion at December 31, 2013. This decline resulted primarily from repayments, conversions to amortizing loans and loans sold/transferred to held-for-sale. Residential first mortgages with this payment feature are primarily to high-credit-quality borrowers who have on average significantly higher origination and refreshed FICO scores than other loans in the residential first mortgage portfolio, and have exhibited significantly lower 30+ delinquency rates as compared with residential first mortgages without this payment feature. As such, Citi does not believe the residential mortgage loans with this payment feature represent substantially higher risk in the portfolio.

Citi does not offer option-adjustable rate mortgages/negative-amortizing mortgage products to its customers. As a result, option-adjustable rate mortgages/negative-amortizing mortgages represent an insignificant portion of total balances, since they were acquired only incidentally as part of prior portfolio and business purchases.



80



North America Consumer Mortgage Quarterly Credit Trends-Net Credit Losses and Delinquencies-Residential First Mortgages

The following charts detail the quarterly credit trends for Citigroup's residential first mortgage portfolio in North America .

North America Residential First Mortgage - EOP Loans

In billions of dollars

North America Residential First Mortgage - Net Credit Losses

In millions of dollars

Note: CMI refers to loans originated by CitiMortgage. CFNA refers to loans originated by CitiFinancial. Totals may not sum due to rounding.

(1)

4Q'13 includes $6 million of charge-offs related to Citi's fulfillment of its obligations under the national mortgage and independent foreclosure review settlements.

(2)

4Q'13 excludes approximately $84 million of net credit losses consisting of (i) approximately $69 million of charge-offs related to a change in the charge-off policy for mortgages originated in CitiFinancial to more closely align to policies used in the CitiMortgage business, and (ii) approximately $15 million of charge-offs related to a change in the estimate of net credit losses related to collateral dependent loans to borrowers who have gone through Chapter 7 bankruptcy.

(3)

2Q'14 excludes a recovery of approximately $58 million in CitiMortgage.

(4)

Increase in 4Q'14 CitiFinancial residential first mortgage loss driven by portfolio seasoning and loss mitigation activities.

(5)

Year-over-year change in the S&P/Case-Shiller U.S. National Home Price Index.

(6)

Year-over-year change as of October 2014.


North America Residential First Mortgage Delinquencies-Citi Holdings

In billions of dollars

Note: Days past due excludes (i) U.S. mortgage loans that are guaranteed by U.S. government-sponsored agencies because the potential loss predominantly resides with the U.S. agencies, and (ii) loans recorded at fair value. Totals may not sum due to rounding.


Credit performance (net credit losses and delinquencies) of the residential first mortgage portfolio continued to improve during 2014, although the home price index (HPI), which varies from market to market (as indicated in the table below), moderated throughout 2014 compared to the prior year. The decline in net credit losses during 2014 was driven by continued improvement in credit, HPI, the economic environment and continued management actions, primarily asset sales and loans transferred to held-for-sale and, to a lesser extent, loan modifications. CitiFinancial's net credit losses improved more modestly in 2014 compared to CitiMortgage, including an increase in net credit losses in the fourth quarter of 2014 due to portfolio seasoning and loss mitigation activities.

Residential first mortgages originated by CitiFinancial have a higher net credit loss rate (4.6%, compared to 0.4% for CitiMortgage as of the fourth quarter of 2014), as CitiFinancial borrowers tend to have higher LTVs and lower FICOs than CitiMortgage borrowers. CitiFinancial's residential first mortgages also have a significantly different geographic distribution, with different mortgage market conditions that tend to lag the overall improvements in HPI.

During 2014, continued management actions, primarily assets sales and loans transferred to held-for-sale and, to a lesser extent, loan modifications, were the primary drivers of the overall improvement in delinquencies in Citi Holdings' residential first mortgage portfolio. Citi sold or transferred to held-for-sale approximately $1.2 billion of delinquent residential first mortgages in 2014 (compared to $2.1 billion in 2013), including $0.6 billion during the fourth quarter of 2014. Credit performance from quarter to quarter could continue to be impacted by the volume of delinquent loan sales (or lack of significant sales) and HPI, as well as increases in interest rates.





81



North America Residential First Mortgages-State Delinquency Trends

The following tables set forth, for total Citigroup, the six states and/or regions with the highest concentration of Citi's residential first mortgages as of December 31, 2014 and December 31, 2013.


In billions of dollars

December 31, 2014

December 31, 2013

State (1)

ENR (2)

ENR

Distribution

90+DPD

%

%

LTV >

100% (3)

Refreshed

FICO

ENR (2)

ENR

Distribution

90+DPD

%

%

LTV >

100% (3)

Refreshed

FICO

CA

$

18.9


31

%

0.6

%

2

%

745


$

19.2


30

%

1.0

%

4

%

738


NY/NJ/CT (4)(5)

12.2


20


1.9


2


740


11.7


18


2.6


3


733


FL (4)

2.8


5


3.0


14


700


3.1


5


4.4


25


688


IN/OH/MI (4)

2.5


4


2.9


10


667


3.1


5


3.9


21


659


IL (4)

2.5


4


2.5


9


713


2.7


4


3.8


16


703


AZ/NV

1.3


2


1.9


18


715


1.5


2


2.7


25


710


Other

19.9


33


3.4


5


679


23.1


36


4.1


8


671


Total

$

60.1


100

%

2.1

%

4

%

715


$

64.4


100

%

2.9

%

8

%

705



Note: Totals may not sum due to rounding.

(1)

Certain of the states are included as part of a region based on Citi's view of similar HPI within the region.

(2)

Ending net receivables. Excludes loans in Canada and Puerto Rico, loans guaranteed by U.S. government agencies, loans recorded at fair value and loans subject to LTSCs. Excludes balances for which FICO or LTV data are unavailable.

(3)

LTV ratios (loan balance divided by appraised value) are calculated at origination and updated by applying market price data.

(4)

New York, New Jersey, Connecticut, Indiana, Ohio, Florida and Illinois are judicial states.

(5)

Increase in ENR year-over-year was due to originations in Citicorp.

The significant improvement in Citigroup's residential first mortgages LTV percentages at year-end 2014 compared to the prior year end was driven by HPI improvements across substantially all metropolitan statistical areas, thereby increasing values used in the determination of LTV. Additionally, delinquent and re-performing asset sales of high LTV loans and, to a lesser extent, modification programs involving principal forgiveness during 2014 further reduced the amount of loans with greater than 100% LTV. While 90+ days past due delinquency rates have improved for the states and regions above, the continued longer foreclosure timelines (see discussion under "Foreclosures" below) could result in less improvement in these rates in the future, especially in judicial states (i.e., states that require foreclosures to be processed via court approval).

Foreclosures

A substantial majority of Citi's foreclosure inventory consists of residential first mortgages. At December 31, 2014 , Citi's foreclosure inventory included approximately $0.6 billion, or 0.9%, of residential first mortgages, compared to $0.8 billion, or 1.2%, at December 31, 2013 (based on the dollar amount of ending net receivables of loans in foreclosure inventory, excluding loans that are guaranteed by U.S. government agencies and loans subject to LTSCs). This decline in 2014 was largely attributed to CitiMortgage loans sold or transferred to held-for-sale.

Citi's foreclosure inventory continues to be impacted by the ongoing extensive state and regulatory requirements related to the foreclosure process, which continue to result in longer foreclosure timelines. Citi's average timeframes to move a loan out of foreclosure are two to three times longer than historical norms, and continue to be even more pronounced in judicial states, where Citi has a higher concentration of residential first mortgages in foreclosure. As

of December 31, 2014 , approximately 21% of Citi's total foreclosure inventory was active foreclosure units in process for over two years, compared to 29% as of December 31, 2013, with the decline primarily attributed to CitiMortgage loans sold or transferred to held-for-sale.


North America Consumer Mortgage Quarterly Credit Trends-Net Credit Losses and Delinquencies-Home Equity Loans

Citi's home equity loan portfolio consists of both fixed-rate home equity loans and loans extended under home equity lines of credit. Fixed-rate home equity loans are fully amortizing. Home equity lines of credit allow for amounts to be drawn for a period of time with the payment of interest only and then, at the end of the draw period, the then-outstanding amount is converted to an amortizing loan (the interest-only payment feature during the revolving period is standard for this product across the industry). After conversion, the home equity loans typically have a 20-year amortization period.



82



Revolving HELOCs

At December 31, 2014 , Citi's home equity loan portfolio of $28.1 billion included approximately $16.7 billion of home equity lines of credit (Revolving HELOCs) that are still within their revolving period and have not commenced amortization, or "reset," compared to $18.9 billion at December 31, 2013. The following chart indicates the FICO and combined loan-to-value (CLTV) characteristics of Citi's Revolving HELOCs portfolio and the year in which they reset:


North America Home Equity Lines of Credit Amortization – Citigroup

Total ENR by Reset Year

In billions of dollars as of December 31, 2014

Note: Totals may not sum due to rounding.


Approximately 10% of Citi's total Revolving HELOCs portfolio had commenced amortization as of December 31, 2014 . Of the remaining Revolving HELOCs portfolio, approximately 78% will commence amortization during 2015–2017. Before commencing amortization, Revolving HELOC borrowers are required to pay only interest on their loans. Upon amortization, these borrowers will be required to pay both interest, usually at a variable rate, and principal that amortizes typically over 20 years, rather than the typical 30-year amortization. As a result, Citi's customers with Revolving HELOCs that reset could experience "payment shock" due to the higher required payments on the loans.

While it is not certain what, if any, impact this payment shock could have on Citi's delinquency rates and net credit losses, Citi currently estimates that the monthly loan payment for its Revolving HELOCs that reset during 2015–2017 could increase on average by approximately $360, or 170%. Increases in interest rates could further increase these payments given the variable nature of the interest rates on these loans post-reset. Of the Revolving HELOCs that will commence amortization during 2015–2017, approximately $1.6 billion, or 12%, of the loans have a CLTV greater than 100% as of December 31, 2014 . Borrowers' high loan-to-value positions, as well as the cost and availability of refinancing options, could limit borrowers' ability to refinance their Revolving HELOCs as these loans begin to reset.

Based on the limited number of Revolving HELOCs that have begun amortization as of December 31, 2014 , approximately 6.4% of the amortizing home equity loans were 30+ days past due, compared to 2.7% of the total outstanding home equity loan portfolio (amortizing and non-amortizing). This compared to 6.0% and 2.8%, respectively, as of December 31, 2013. However, these resets have generally

occurred during a period of historically low interest rates, which Citi believes has likely reduced the overall "payment shock" to the borrower.

Citi continues to monitor this reset risk closely and will continue to consider any potential impact in determining its allowance for loan loss reserves. In addition, management continues to review and take additional actions to offset potential reset risk, such as establishment of a borrower outreach program to provide reset risk education, establishment of a reset risk mitigation unit and proactively contacting high-risk borrowers. For further information on reset risk, see "Risk Factors-Credit and Market Risks" above.


Net Credit Losses and Delinquencies

The following charts detail the quarterly credit trends for Citi's home equity loan portfolio in North America .

North America Home Equity - EOP Loans

In billions of dollars

North America Home Equity - Net Credit Losses

In millions of dollars

Note: Totals may not sum due to rounding.

(1)

4Q'13 includes $15 million of charge-offs related to Citi's fulfillment of its obligations under the national mortgage and independent foreclosure review settlements.

(2)

4Q'13 excludes approximately $100 million of net credit losses consisting of (i) approximately $64 million for the acceleration of accounting losses associated with modified home equity loans determined to be collateral dependent, (ii) approximately $22 million of charge-offs related to a change in the charge-off policy for mortgages originated in CitiFinancial to more closely align to policies used in the CitiMortgage business, and (iii) approximately $14 million of charge-offs related to a change in the estimate of net credit losses related to collateral dependent loans to borrowers that have gone through Chapter 7 bankruptcy.



83




North America Home Equity Loan Delinquencies - Citi Holdings

In billions of dollars

Note: Totals may not sum due to rounding.


As evidenced by the tables above, home equity loan net credit losses and delinquencies improved during 2014, albeit at a slower pace than the prior year, primarily due to continued modifications and liquidations. Given the limited market in which to sell delinquent home equity loans, as well as the relatively smaller number of home equity loan modifications and modification programs (see Note 15 to the Consolidated Financial Statements), Citi's ability to reduce delinquencies or net credit losses in its home equity loan portfolio in Citi Holdings, whether pursuant to deterioration of the underlying credit performance of these loans, the reset of the Revolving HELOCs (as discussed above) or otherwise, is more limited as compared to residential first mortgages.



North America Home Equity Loans-State Delinquency Trends

The following tables set forth, for total Citigroup, the six states and/or regions with the highest concentration of Citi's home equity loans as of December 31, 2014 and December 31, 2013.

In billions of dollars

December 31, 2014

December 31, 2013

State (1)

ENR (2)

ENR

Distribution

90+DPD

%

%

CLTV >

100% (3)

Refreshed

FICO

ENR (2)

ENR

Distribution

90+DPD

%

%

CLTV >

100% (3)

Refreshed

FICO

CA

$

7.4


28

%

1.5

%

10

%

729


$

8.2


28

%

1.6

%

17

%

726


NY/NJ/CT (4)

6.7


25


2.4


11


721


7.2


24


2.3


12


718


FL (4)

1.8


7


2.2


36


707


2.1


7


2.9


44


704


IL (4)

1.1


4


1.4


35


716


1.2


4


1.6


42


713


IN/OH/MI (4)

0.8


3


1.7


31


688


1.0


3


1.6


47


686


AZ/NV

0.6


2


2.2


46


716


0.7


2


2.1


53


713


Other

8.1


30


1.7


19


703


9.5


32


1.7


26


699


Total

$

26.6


100

%

1.8

%

17

%

715


$

29.9


100

%

1.9

%

23

%

712



Note: Totals may not sum due to rounding.

(1)

Certain of the states are included as part of a region based on Citi's view of similar HPI within the region.

(2)

Ending net receivables. Excludes loans in Canada and Puerto Rico and loans subject to LTSCs. Excludes balances for which FICO or LTV data are unavailable.

(3)

Represents combined loan-to-value (CLTV) for both residential first mortgages and home equity loans. CLTV ratios (loan balance divided by appraised value) are calculated at origination and updated by applying market price data.

(4)

New York, New Jersey, Connecticut, Indiana, Ohio, Florida and Illinois are judicial states.    


Citigroup Residential Mortgages-Representations and Warranties Repurchase Reserve

In connection with Citi's sales of residential mortgage loans to the GSEs and private investors, as well as through private-label residential mortgage securitizations, Citi typically makes representations and warranties that the loans sold meet certain requirements, such as the loan's compliance with any applicable loan criteria established by the buyer and the validity of the lien securing the loan. The specific representations and warranties made by Citi in any particular transaction depend on, among other things, the nature of the transaction and the requirements of the investor (e.g., whole loan sale to the GSEs versus loans sold through securitization transactions), as well as the credit quality of the loan (e.g., prime, Alt-A or subprime).




These sales expose Citi to potential claims for alleged breaches of its representations and warranties. In the event of such a breach, Citi could be required either to repurchase the mortgage loans with the identified defects (generally at unpaid principal balance plus accrued interest) or to indemnify ("make whole") the investors for their losses on these loans.

Citi has recorded a repurchase reserve for purposes of its potential representation and warranty repurchase liability resulting from its whole loan sales to the GSEs and, to a lesser extent, private investors, which are made through Citi's consumer business in CitiMortgage. The repurchase reserve was approximately $224 million and $341 million as of December 31, 2014 and December 31, 2013, respectively.

For additional information, see Notes 27 and 28 to the Consolidated Financial Statements.


84



CONSUMER LOAN DETAILS


Consumer Loan Delinquency Amounts and Ratios

Total

loans (1)

90+ days past due (2)

30-89 days past due (2)

December 31,

December 31,

December 31,

In millions of dollars, except EOP loan amounts in billions

2014

2014

2013

2012

2014

2013

2012

Citicorp (3)(4)

Total

$

297.2


$

2,664


$

2,973


$

3,081


$

2,820


$

3,220


$

3,509


Ratio

0.90

%

0.99

%

1.05

%

0.95

%

1.07

%

1.19

%

Retail banking

Total

$

151.7


$

840


$

952


$

879


$

902


$

1,049


$

1,112


Ratio

0.56

%

0.63

%

0.61

%

0.60

%

0.70

%

0.77

%

North America

46.8


225


257


280


212


205


223


Ratio

0.49

%

0.60

%

0.68

%

0.46

%

0.48

%

0.54

%

EMEA

5.4


19


34


48


42


51


77


Ratio

0.35

%

0.61

%

0.94

%

0.78

%

0.91

%

1.51

%

Latin America

27.7


410


470


323


315


395


353


Ratio

1.48

%

1.55

%

1.15

%

1.14

%

1.30

%

1.26

%

Asia

71.8


186


191


228


333


398


459


Ratio

0.26

%

0.27

%

0.33

%

0.46

%

0.56

%

0.66

%

Cards

Total

$

145.5


$

1,824


$

2,021


$

2,202


$

1,918


$

2,171


$

2,397


Ratio

1.25

%

1.34

%

1.47

%

1.32

%

1.44

%

1.60

%

North America-Citi-branded

67.5


593


681


786


568


661


771


Ratio

0.88

%

0.97

%

1.08

%

0.84

%

0.94

%

1.06

%

North America-Citi retail services

46.5


678


771


721


748


830


789


Ratio

1.46

%

1.67

%

1.87

%

1.61

%

1.79

%

2.04

%

EMEA

2.2


30


32


48


34


42


63


Ratio

1.36

%

1.33

%

1.66

%

1.55

%

1.75

%

2.17

%

Latin America

10.9


345


349


413


329


364


432


Ratio

3.17

%

2.88

%

2.79

%

3.02

%

3.01

%

2.92

%

Asia

18.4


178


188


234


239


274


342


Ratio

0.97

%

0.98

%

1.15

%

1.30

%

1.43

%

1.68

%

Citi Holdings (5)(6)

Total

$

72.6


$

1,975


$

2,756


$

4,611


$

1,699


$

2,724


$

4,228


Ratio

2.88

%

3.28

%

4.42

%

2.48

%

3.24

%

4.05

%

International

1.8


12


162


345


36


200


393


Ratio

0.67

%

2.75

%

4.54

%

2.00

%

3.39

%

5.17

%

North America

70.8


1,963


2,594


4,266


1,663


2,524


3,835


Ratio

2.94

%

3.33

%

4.41

%

2.49

%

3.24

%

3.96

%

Other (7)

0.2


Total Citigroup

$

370.0


$

4,639


$

5,729


$

7,692


$

4,519


$

5,944


$

7,737


Ratio

1.27

%

1.49

%

1.93

%

1.24

%

1.54

%

1.94

%

(1)

Total loans include interest and fees on credit cards.

(2)

The ratios of 90+ days past due and 30–89 days past due are calculated based on end-of-period (EOP) loans, net of unearned income.

(3)

The 90+ days past due balances for North America-Citi-branded and North America-Citi retail services are generally still accruing interest. Citigroup's policy is generally to accrue interest on credit card loans until 180 days past due, unless notification of bankruptcy filing has been received earlier.

(4)

The 90+ days and 30–89 days past due and related ratios for Citicorp North America exclude U.S. mortgage loans that are guaranteed by U.S. government-sponsored entities since the potential loss predominantly resides within the U.S. government-sponsored entities. The amounts excluded for loans 90+ days past due and (EOP loans) were $562 million ($1.1 billion), $690 million ($1.2 billion) and $742 million ($1.4 billion) at December 31, 2014 , 2013 and 2012,


85



respectively. The amounts excluded for loans 30–89 days past due (EOP loans have the same adjustment as above) were $122 million, $141 million and$122 million at December 31, 2014 , 2013 and 2012, respectively.

(5)

The 90+ days and 30–89 days past due and related ratios for Citi Holdings North America exclude U.S. mortgage loans that are guaranteed by U.S. government-sponsored entities since the potential loss predominantly resides within the U.S. government-sponsored entities. The amounts excluded for loans 90+ days past due (and EOP loans) for each period were $2.2 billion ($4.0 billion), $3.3 billion ($6.4 billion) and $4.0 billion ($7.1 billion) at December 31, 2014 , 2013 and 2012, respectively. The amounts excluded for loans 30–89 days past due (EOP loans have the same adjustment as above) for each period were $0.5 billion, $1.1 billion and $1.2 billion at December 31, 2014 , 2013 and 2012, respectively.

(6)

The December 31, 2014 , 2013 and 2012 loans 90+ days past due and 30–89 days past due and related ratios for North America exclude $14 million, $0.9 billion and $1.2 billion, respectively, of loans that are carried at fair value.

(7)

Represents loans classified as Consumer loans on the Consolidated Balance Sheet that are not included in the Citi Holdings consumer credit metrics.


Consumer Loan Net Credit Losses and Ratios

Average

loans (1)

Net credit losses (2)

In millions of dollars, except average loan amounts in billions

2014

2014

2013

2012

Citicorp

Total

$

297.8


$

7,051