Analysis of Citigroup's Financial Statements

Citigroup had a good year in 2003, despite a difficult business environment. Rising oil prices threatened to bring inflation back to our country. The economy was not doing well, so people often did not have enough money to save. And with on-line stock purchasing, who needed a broker anymore?

Yet Citigroup, a multinational firm, is managing to do quite well. Its dividends paid is up $2 billion over last year. Long term debt is down a bit, and what had to be reissued is refinanced in this lovely economy. Citicorp is an example of how to do hang in there through tough times, and even make money.

Banks earn income on the spread between what interest they pay their depositors and the interest they receive from investments. When interest rates dip very low and competition intensifies, maintaining that spread can be difficult.

The interest revenue decreased by $1.89 billion. The loss due to decreasing interest rates, however, was over $10 billion. The company managed to market enough consumer and corporate loans to make up the difference.

Also of note are the shifts in the debt structure. The company used its cash to retire debt, and took advantage of rate changes on other debt options. Thus interest paid fell more than interest earned, and the company had a net balance for interest revenue. The company did a great job of making the best of an interesting situation.

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t Activities and Corporate/Other subsidiaries both managed to generate income this year, which is an improvement over last. Global Consumer, Global Corporate and Investment Bank, and Global Investment Management all increased their assets and their income. By far the shining star of the subsidiaries was Global and Investment Bank, with over $2 million in income and an net income/total assets ratio increase of 2.55. Private client services was the most disappointing, as it decreased its income while keeping revenues the same. Luckily it's the smallest subsidiary of the group. Stockholders equity There were no new issuances of common stock in 2003. There was a net decrease of 16,267,782 shares from treasury stock. Included in this were stock options exercised for 57,559,301 shares. Naturally the stock price was higher when they were exercised, so $903 million was charged as an compensation expense. In 2004 5.8 millions shares will be eligible to be exercised, with a weighted average price of $7.30. Since the market value last year average $34.07, we can expect a much higher expense next year. It will be 2006 before any other stock options are eligible. The company has changed the way it accounts for these sto
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