Citicorp's Senior Debt Rating Raised to "A+"

Strategic Insights -

Citicorp's senior debt rating has been increased to "A+" from "A" by Fitch, a leading credit rating agency. This change, along with the removal of Citicorp from FitchAlert, suggests a reduced risk profile for the corporation. The revised ratings reflect improved capital ratios, global diversification of revenues and earnings, and enhanced operating performance. Citicorp's net income for 1994 totaled $3.37 billion, a record for any domestic banking company, and core profits are expected to show meaningful gains over the next two years.

Key Takeaways:

  • Citicorp's senior debt rating has been raised to "A+" from "A" by Fitch, indicating a reduced risk profile.
  • The corporation's improved capital ratios, global diversification, and enhanced operating performance contributed to the rating upgrade.
  • Citicorp's net income for 1994 reached $3.37 billion, a record for any domestic banking company.
  • Core profits are expected to show meaningful gains over the next two years.
  • The risk-adjusted Tier I capital ratio has grown almost 300 basis points in two years to 7.8%.
  • Nonperforming assets declined sharply over this period, and additions to the reserve for loan losses boosted coverage of problem loans to nearly 110%.
  • Citicorp's global presence in place, and the corporation is fine-tuning its consumer and wholesale activities.
  • The consumer business is aimed at building "brand name" recognition to foster long-term relationships and customer loyalty.
  • The global wholesale strategy is focused on a select group of client and industry groups.
  • Citicorp's investment management is also being emphasized, leveraging its largest non-Swiss private banking operation in the world.

Statistics:

  • $1.9 billion of senior debt, $3 billion of subordinated debt, and $4 billion of preferred stock were affected by the rating upgrade.
  • The risk-adjusted Tier I capital ratio has grown almost 300 basis points in two years to 7.8%.
  • Nonperforming assets declined sharply over this period, and additions to the reserve for loan losses boosted coverage of problem loans to nearly 110%.
  • Citicorp's net income for 1994 totaled $3.37 billion, a record for any domestic banking company.
  • Core profits are expected to show meaningful gains over the next two years.

Sources:

  • FitchAlert
  • Citicorp press release
  • PR Newswire, "Citicorp's Senior Debt Rating Raised to 'A+', Removed from FitchAlert", March 30, 1995.