CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF INCOME Citigroup Inc

Question

CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF INCOME Citigroup Inc. and Subsidiaries Years ended December 31 2017 2016 2015 In milions of dollars, excepper share amownts Revenues Interest revenue Interest expense Net interest revenue Commissions and fees Principal transactions Administration and other fiduciary fees Realized gains on sales of investments, net Other-than temporary impairment losses on investments 61,204 S 16,517 44,687 $ 12,939 57,615 S 58,551 11,921 45,104 S 11,938 S 6,008 2,856 3,079 948 Gross impairment losses (620) Less: Impaiments recognized in AOCI Net impairment losses recognized in eamings Other revenue Total non-interest revenues Total revenues, net of interest expense Provisions for credit losses and for benefits and claims Provision for loan losses Policyholder benefits and claims Provision (release) for unfunded lending commitments Total provisions for credit losses and for benefits and claims Operating expe Compensation and benefits Premises and equipment Technology communication Advertising and marketing Other operating Total operating expenses Income from continuing operations before income taxes Provision for income taxes (benefits) Income (loss) from continuing operations Discontinued operations Loss from discontinued operations Provision (benefit) for income taxes Loss from discontinued operations, net of taxes Net income (loss) before attribution of noncontrolling 26,762 $ 71,449 S 24,771 S 69.875 $ 29,724 76,354 7,503 $ 6,749 S 7,108 (161) S 6,982 $ 21,181 $ 20,970 S 21,769 2,453 6,685 1,632 1,608 10,840 41,237 S 22,761 S 29,388 6,627) S 24,826 7,440 17.386 6,444 15,033 S (104) S (80) S (22) (58) S (6,738) S 60 6,798) S 14,975 S 17,332 17,242 Citigroup's net income (loss) Basic earnings per share Income (loss) from continuing operations Loss from discontinued operations, net of taxes Net income (loss) Weighted average common shares outstanding (2.94) S (0.04) (2.98) S 4.74 S 2,698.5 2,888.1 3,004.0

Explanation / Answer

If we look at the consolidated income statement, we find the following differences:

1. The Interest revenue keep increasing over the three year period that is considered. However, the interest expense increases disproportionately in the year ended 2017. This is a negative and the business should try to reduce this expense

2. Another significant difference is the loss due to impairment has reduced which is a positive

3. Because of the reduced impairment losses, the total revenues actually increased for 2017 when compared to the sharp dip in revenues in the year 2016

4. The provisions for bad debt or non performing assets which reduced in 2016 actually increased in 2017 which is a negative. The bank should have a lower provision for bad debt as it increases its profitability

5. Finally, the company suffered a exceptional loss for the year 2017 as against the profits for the two preceding years. This is because the provision for income taxes is very high in 2017. Therefore its a negative for this year. However, this can be treated as exceptional item on the income statement since it would not happen every year.

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