Citigroup Reports Pro Forma Quarterly Net Income of $729 Million, With Consumer and Insurance Businesses Strong, Corporate Business Sharply Down — Diluted Per Share was $0.30

Business Wire, Oct 21, 1998

NEW YORK--(BUSINESS WIRE)--Oct. 21, 1998--

Summary of Results                  %              %                %
                               Change         Change           Change
(In Millions of                  From Travelers From Citigroup   From
  Dollars)            Citicorp    `97   Group    `97 Pro forma    `97
                                                           (A)
1998 Third Quarter
Revenue (B)             $6,071      2  $4,928   (28)   $10,999   (14)
Net Income                 530      4     199   (81)       729   (53)
Core Income (C)            530   (50)     199   (81)       729   (65)
Return on Common Equity   10.0      -     3.2      -       6.5      -
  (C) (%)

1998 Nine Months
Revenue (B)            $18,928      9 $18,881    (4)   $37,809      2
Net Income               2,692      6   2,433   (11)     5,125    (3)
Core Income (C)          2,692   (13)   2,242   (18)     4,934   (15)
Return on Common Equity   17.6      -    14.2      -      15.9      -
  (C) (%)

1998 Third Quarter
Net Income Per Share (Diluted)                            0.30   (52)
Core Income Per Share (Basic)                             0.30   (67)
Core Income Per Share (Diluted)                           0.30   (65)

1998 Nine Months
Net Income Per Share (Diluted)                            2.14      -
Core Income Per Share (Basic)                             2.12   (15)
Core Income Per Share (Diluted)                           2.06   (13)

(A)  Citigroup pro forma results combine those of Citicorp and
     Travelers Group. See "Calculation of Earnings Per Share" on page
     26.

(B)  Revenue is shown net of interest expense. Citicorp's revenue is
     adjusted principally for the effect of credit card
     securitization.

(C)  Core income represents net income adjusted to exclude the effects
     of restructuring charges. Return on Common Equity is based upon
     Core Income.

Citigroup (NYSE:CCI) today reported pro forma core income of $729 million ($0.30 per diluted share) in the 1998 third quarter. This compares with core income of $2.1 billion ($0.86 per diluted share) in the same 1997 quarter. Pro forma net income in the 1997 third quarter was $1.5 billion ($0.63 per diluted share) including the effects of a $556 million after-tax restructuring charge. Revenue was $11.0 billion, down 14% from $12.8 billion in 1997.

In a statement on the earnings, John S. Reed and Sanford I. Weill, who serve as Chairmen and Co-Chief Executive Officers, commented: "The results were generally strong across all our consumer businesses, but show the effects of unusually severe market forces on corporate businesses and portfolios. Looking ahead, we expect that the consumer businesses will continue to do well, that the corporate businesses will stabilize around established franchises, and that our diversified earnings streams and exceptional capital and reserves will prove their value in the fourth quarter and the year ahead."

They also stated: "As turbulent as these markets have been, we as a company are in excellent shape to make necessary adjustments, to ride out bad periods and hold on to fundamentally sound positions, and to search out opportunities that arise in times of stress. We are already acting to assure that business unit expenses are consistent with their business expectations, and we expect these actions to be reflected in future results."

Results by Predecessor Company  --  1998 Third Quarter

Citicorp                           Travelers Group

Global Consumer              $ 477 Investment Services         ($325)
Global Corporate Banking     (127) Consumer Finance Services       83
Investment Activities           71 Life Insurance Services        222
Corporate Items                109 Property & Casualty            245
                                   Insurance
                                   Portfolio Gains                 25
                                   Corporate and Other           (51)

Total Citicorp               $ 530 Total Travelers Group        $ 199

Explaining the way the third quarter results are presented, Heidi G. Miller, Chief Financial Officer, said: "Since Citigroup was created after the close of the third quarter, we show pro forma results, as though the companies were together in the quarter, as well as the results of each of the predecessor companies, Citicorp and Travelers Group. Citigroup Segment Income (page 3) is a transition toward a new, clearer way of presenting the results in 1999 along Core Business lines: Consumer, Corporate, and Asset Management.

"Certain components of the Core Business lines are still being determined; for example, Salomon Smith Barney's retail operations are shown this time in the Corporate segment. Also, the methodology for breaking out the Asset Management segment results could change.

"In addition to the Core Business lines, there will be a separate breakout of Investment Activities, which include Citicorp's venture capital activities, Corporate investments, and certain investments in the former refinancing countries as well as Travelers' portfolio gains. Citicorp's Investment Activities are reported separately here for the first time."