Citi Hungary’s 2012 performance remains strong in a challenging environment

13.6% increase in Corporate Loan Portfolio reinforces commitment to lending

April 4, 2013

Citi Hungary’s 2012 performance remained strong in a challenging global and local market environment, posting HUF 9.4 billion after tax profit under local GAAP. This ranks Citi among the top most profitable banks in Hungary for 2012 with a return on assets (ROA) of 1.2%. Total loans portfolio increased to HUF154.1 billion, an 8 percent increase over 2011 with 13.6 percent growth in corporate loans, reinforcing Citi Hungary’s commitment to lending.

Batara Sianturi, Citi Country Officer for Hungary said, “In 2012 Citi celebrated its 200th year anniversary of serving our clients and communities around the globe. Our performance last year remained well-balanced across the Consumer, Commercial and Corporate Bank businesses with positive operating leverage. We continued to increase our cost efficiency and successfully managed the credit risks across the franchise. While boosting lending, our liquidity remained strong with one of the lowest loan-to-deposit ratios in the Hungarian banking sector. We continue our commitment to ingenuity and responsible finance to achieve common purpose in serving our clients and stakeholders with excellence in the coming years.”

CCO Batara Sianturi presents Citi Hungary’s 2012 financial and business results at a press event on April 4

Launch of the Citi Alumni Network in Hungary

In June 2012, Citi Hungary launched the Citi Alumni Network in Hungary. At the launch event the network’s global electronic platform at www.citialumninetwork.com was previewed, with dedicated country pages specially designed for former Citi employees around the world to reconnect them with Citi and with each other.

Recognition from Clients and Industry Leaders

The commitment to increase service levels and enhance technology continued to be recognized by clients, with Citi Hungary winning a record high number of client and industry awards, including:

• Citi was named as the Best Foreign Bank in Hungary for the first time by EMEA Finance magazine.
• Citi was named as the Best Investment Bank in Hungary for the fourth consecutive year in 2011 in EMEA Finance’s Europe Banking Awards.
• Citi Hungary was named as the Primary Dealer of the Year in 2011 by the Hungarian Government Debt Management Agency.
• Citi was named Best Corporate/Institutional Internet Bank in Hungary for the seventh year by Global Finance Magazine.
• Citi Hungary took the top notch in three categories in Euromoney’s FX Poll 2012, with top rankings in the Corporate Segment in the Spot/Forward, Options and E-Trading League Tables.
• Citi Hungary was Top Rated by Global Custodian Magazine in the Leading Clients category for the third year, and Commended in the Cross-Border/Non-Affiliated Clients category of its 2012 Agent Banks in Emerging Markets Survey.
• Citi Hungary’s Zero Fee Bank Account received the Best Bank Account Award for the fifth time in the MasterCard – Bank of the Year Competition.
• Citigold in Hungary was Top Rated in six categories in Euromoney’s 2012 Private Banking and Wealth Management Survey.

Corporate Banking Business

Citi Hungary’s corporate banking business remained focused on supporting large Hungarian corporations, multinationals, financial institutions and public sector entities. Capitalizing on its global footprint in over 100 countries, Citi provides linkage for its clients and access to international capital markets. Overall, 2012 was a good year in all business lines: treasury, transaction services and global banking.

Markets

• Markets offers a wide range of treasury products to corporate clients to help them effectively conduct their day-to-day activities and manage their business related risks, Citi Hungary’s seasoned Markets team helped clients in selecting the products that best support their business needs. The trust in Citi from clients who were looking for complex solutions remained strong and the bank maintained its Primary Dealer leadership in the local market.
• CitiFX Pulse, the award winning real time web-based foreign exchange trading platform was further developed in 2012 to include Order Module, a key new functionality helping clients to achieve target rates on FX markets in a convenient manner. FX pricing through Bloomberg was introduced that allowed the markets team to expand their target market and offer efficient FX solutions to existing clients.

Citi Transaction Services

• The Citi Transaction Services team completed the migration of all corporate debit cards to chip cards thus enhancing the security of card usage. The IT infrastructure was developed allowing for a timely and smooth introduction of the Intraday GIRO settlement initiated by the National Bank of Hungary, where all Citi clients can benefit from the intraday settlement funds transfer clearing.

Securities & Fund Services

• The Securities and Fund Services (SFS) business delivered good results despite the volatile market environment. The team maintained the profitability of this business and strengthened their market position as top-tier service provider. As the pioneer in the Hungarian market, Citi SFS introduced an Account Operator model supporting client needs by allowing them to become direct members of the local Central Securities Depository (CSD), while enabling Citi to continue to actively manage their accounts.

Global Subsidiaries Group

• In 2012 the GSG team strengthened the products and services proposition to subsidiaries of Citi’s global clients in cooperation with the product partners. Meeting the clients’ complex financial needs remained a key priority for the team. Leveraging Citi’s global network and the team’s local expertise they continued to offer tailor-made solutions to global clients, including supply chain management and other trade finance solutions that helped clients to maintain their competitive position and optimize their risk management.

Top tier local corporates and the public sector

• Citi Hungary’s professional team in the global banking business remained focused on supporting the strategic business and financial efforts of large Hungarian corporations, financial and public sector institutions and the government. Capitalizing on its global platform, Citi provides access for its clients to international capital markets. In addition to various structured financing solutions, equity capital markets and investment banking services, they also offer market-leading global transaction services to the clients in the areas of treasury, trade finance and liquidity management.

Consumer and Citi Commercial Banking Businesses

While 2012 continued to present a challenging market environment, Citi Hungary’s results remained strong in the Cards, Wealth Management, Loans and SME/MME businesses.

The bank optimized its branch network and opened a new state-of-the-art Citigold Center Branch in MOM Park shopping mall in Budapest – enabling the team to serve customers with novel digital experience. The branch was inaugurated by Marc Luet, Consumer Bank CEO in EMEA in November, underlining Citi’s commitment to Hungary. With this new site Citi Hungary is able to serve their customers in all major high traffic shopping malls in Budapest.

Ingenuity across products and services

In 2012 the bank continued to launch new and innovative products and services and enhance existing ones to benefit their customers, including:

• The first Sticker on the Hungarian market linked to a credit card – a small plastic card posted on the back of a mobile phone can make the shopping experience even faster and more convenient.
• An innovative mobile phone recognizing functionality in the CitiPhone banking IVR system (Interactive Voice Response) – through which they provide tailor-made services to customers making annually 500,000 customer calls faster and more convenient.
• The launch of the19.9% interest rate Citibank Debt Consolidation Loan, one of the lowest rate products in the market, and a Large ticket size XXL Personal Loan – as part of the bank’s commitment to consumer lending.
• Upgrading the Citi Mobile Banking services – with enhanced features to open a time deposit online, find the nearest Citibank branch/ATM through a GPS navigation system and access other banking services, with the application downloadable from the citibank.hu website, Apple Store and Android Market.

Wealth Management

• 2012 was another successful year in Citi Hungary’s Wealth Management Business, reaching record volumes in sales of the bank’s diversified investment products. Unique in the Hungarian market was the enhanced Premium Deposit proposition in March, offering an unmatched selection of 30 currency pairs from six currencies, also available through the Citibank Online Internet Banking platform from December. The team streamlined the Mutual Funds offering to include 175 mutual funds from 14 leading local and global fund houses and asset manager partners carefully selected to best meet the needs of customers in these challenging times, along with 37 structured notes offerings in EUR, USD and HUF from multiple issuers. In addition, Citi Hungary started the distribution of the Premium Euro Hungarian Government Bonds with a 5.1% initial annual interest rate.
• In 2012 the bank continued to organize the series of Citigold Investment Seminars where highly regarded experts from Citi Hungary’s internationally renowned fund house and asset management partners provided investment information and market overviews to Citigold customers.

Citi Commercial Bank

• The SME team served clients with a reenergized focus and due to the consistent risk management approach the bank successfully maintained the SME portfolio quality. In 2012 Citi Hungary realigned the business strategy to ensure that they are developing and building relationships with clients who are able to leverage Citi Commercial Bank’s full capabilities with the real values that their services are designed to provide, while meeting the cost-efficiency plans that are gaining an increasing importance in the current environment. In the Citi Commercial Banking business they are offering a wide range of cash management, transactional, financing, trade and treasury services to enterprises with net annual sales ranging from HUF 400 million to HUF 100 billion.
• An outstanding innovation resulting from the bank’s continuous efforts to provide excellent customer service combined with the most relevant financial solutions is the unique Citibank–Opten PartnerWatch service that was developed in partnership with one of Hungary’s leading business information enterprises. This unique, web-based service that they offer for free to registered Citi clients covering up to 300 of their business partners, provides clients fast and easy-to-manage online access to current reliable information about their business partners from the perspective of any possible legal proceedings taken against them, including winding-up, liquidation or bankruptcy. These are valuable information that can assist clients in avoiding establishing or continuing a risky business.
• As part of their educational initiatives, they continued to organize Treasury Roadshow events across the country.

Corporate Social Responsibility Programs

Citi Hungary is committed to supporting the communities in which they do business. In line with Citi’s global corporate social responsibility strategy their programs in Hungary primarily focus on financial education and building social enterprises. They partner with NGOs in order to enhance the impact of their community programs by leveraging their partners’ expertise and long-term experience. Citi Hungary’s experts are volunteering their time and knowledge to support the beneficiaries of their CSR programs.

Key achievements of Citi Hungary’s major long-term CSR programs include:

• More than 146,000 students in 362 elementary schools across Hungary benefited from the technology-based teaching materials in the Citibank Financial Education School Program started in 2001 in partnership with Junior Achievement Hungary.
• Around 1,320 university students participated in the long-term program with Corvinus University of Budapest launched in 2004 to continuously increase the level of financial education through the Series of Citi Lectures, the Citi Case Study Competition and the Citi Best Graduating Student Award.
• Close to 90 civil organizations and small businesses participated in the Social Enterprise Development Programs initiated in 2007 in partnership with NESsT.
• 111,000 trees were planted for Citi Hungary’s customers who switched from printed to paperless e-Statements in their Plant-a-Tree Program launched in 2008.
• 28 young business professionals were supported in their postgraduate studies through the András Felkai Academic Award Fund co-founded by Citi Hungary in 2002.
• More than 800 underprivileged or disabled children are living and studying in an improved environment due to the work done by Citi’s local volunteering teams on the annual Citi Global Community Days since 2005.
• Thousands of children across the country benefited from the Children Health Care and Safety Support Program started in 1998.
• Hundreds of young Hungarian music students have enjoyed the bank’s support in building their talent through the partner program with the Association of Friends of Franz Liszt Music Academy since 2001.

Major financial data for Citibank Europe plc Hungarian Branch Office (as of December 31, 2012, according to Hungarian Accounting Standards)