Cigna Group (NYSE:CI)

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Cigna Group, effective income tax rate (EITR) reconciliation

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Nominal federal income tax rate	21.00%	21.00%	21.00%	21.00%	21.00%
Change in valuation allowance	14.60%	23.40%	0.00%	0.00%	0.00%
State income tax (benefit), net of federal income tax benefit	1.20%	-0.70%	0.20%	-0.10%	0.20%
Investment tax credits	-2.10%	-0.80%	-0.20%	0.00%	0.00%
Impact of businesses held for sale	-2.40%	-3.90%	0.00%	0.00%	0.00%
Effect of foreign earnings	-4.90%	-3.10%	-1.20%	-0.50%	-0.60%
Other foreign tax attributes	0.00%	-2.80%	0.00%	0.00%	0.00%
Swiss tax attributes	0.00%	-30.40%	0.00%	0.00%	0.00%
Impact of sale of businesses	0.00%	0.00%	-0.40%	0.00%	1.00%
Health insurance industry tax	0.00%	0.00%	0.00%	0.00%	0.90%
Other	0.90%	-0.10%	-0.20%	-0.20%	-0.60%
Effective income tax rate	28.30%	2.60%	19.20%	20.20%	21.90%

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

The effective income tax rate exhibited relative stability from 2020 through 2022, closely aligning with the constant nominal federal income tax rate of 21.00%. However, a period of extreme volatility occurred between 2023 and 2024, with the rate dropping sharply to 2.60% before surging to 28.30%.

Primary Drivers of Rate Volatility: The significant reduction in the effective income tax rate in 2023 was primarily driven by a substantial negative impact from Swiss tax attributes, which contributed a 30.40% reduction. This was further augmented by other foreign tax attributes of -2.80% and the impact of businesses held for sale at -3.90%. These offsets were partially countered by a 23.40% increase resulting from changes in valuation allowances.; The spike to 28.30% in 2024 was largely influenced by a positive adjustment in the valuation allowance of 14.60% and an increase in state income taxes to 1.20%. These upward pressures were mitigated by expanding credits and deductions, including investment tax credits of -2.10% and the continued impact of businesses held for sale at -2.40%.
Foreign Earnings and Tax Attributes: A consistent downward trend is observed in the effect of foreign earnings, which expanded from a -0.60% impact in 2020 to -4.90% by 2024. This suggests an increasing reliance on or benefit from international tax positioning to reduce the overall tax burden over the five-year period.
Secondary Adjustments: Investment tax credits emerged as a growing factor for tax reduction, moving from no recorded impact prior to 2022 to a -2.10% reduction by 2024. Other adjustments, such as health insurance industry taxes and impacts from the sale of businesses, were transient and only appeared in the earlier years of the analysis period.

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Cigna Group, components of deferred tax assets and liabilities

US$ in millions

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Foreign tax attributes	1,752)	1,827)	—)	—)	—)
Deferred loss, sale of business	773)	584)	—)	—)	—)
Investments	561)	—)	—)	—)	—)
Other insurance and contractholder liabilities	300)	353)	311)	263)	278)
Loss carryforwards	270)	200)	205)	278)	177)
Other accrued liabilities	207)	244)	265)	412)	358)
Employee and retiree benefit plans	177)	217)	189)	304)	477)
Unrealized depreciation on investments and foreign currency translation	93)	81)	156)	—)	—)
Policy acquisition expenses	—)	39)	41)	—)	—)
Other	256)	242)	190)	246)	209)
Deferred tax assets before valuation allowance	3,828)	3,787)	1,357)	1,503)	1,499)
Valuation allowance for deferred tax assets	(2,332)	(1,498)	(208)	(246)	(207)
Deferred tax assets, net of valuation allowance	2,057)	2,289)	1,149)	1,257)	1,292)
Acquisition-related basis differences	(7,822)	(8,105)	(8,347)	(8,726)	(8,989)
Depreciation and amortization	(243)	(371)	(512)	(698)	(660)
Policy acquisition expenses	(74)	—)	—)	(312)	(289)
Unrealized appreciation on investments and foreign currency translation	—)	—)	—)	(104)	(171)
Other	—)	—)	(41)	(212)	(122)
Deferred tax liabilities	(8,139)	(8,476)	(8,900)	(10,052)	(10,231)
Net deferred income tax assets (liabilities)	(6,082)	(6,187)	(7,751)	(8,795)	(8,939)
Net deferred income tax assets (liabilities) classified as Liabilities of businesses held for sale	—)	—)	—)	449)	—)
Net deferred income tax assets (liabilities) per Consolidated Balance Sheets	(6,082)	(6,187)	(7,751)	(8,346)	(8,939)

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

The net deferred income tax position has shifted from a liability of 8,939 million USD in 2020 to 6,082 million USD by the end of 2024. This represents a consistent reduction in the net deferred tax liability over the five-year period, driven by a combination of decreasing deferred tax liabilities and a substantial increase in gross deferred tax assets starting in 2023.

Deferred Tax Assets (DTA) Trends: Gross deferred tax assets remained relatively stable between 2020 and 2022, hovering around 1.3 to 1.5 billion USD. However, a significant increase occurred in 2023, with gross assets rising to 3,787 million USD and reaching 3,828 million USD in 2024. This surge is primarily attributed to the emergence of foreign tax attributes, which contributed 1,827 million USD in 2023 and 1,752 million USD in 2024, as well as deferred losses from the sale of businesses, which grew from 584 million USD in 2023 to 773 million USD in 2024.
Valuation Allowance Analysis: The valuation allowance applied to deferred tax assets increased dramatically in the latter part of the period. While the allowance was approximately 200 million USD between 2020 and 2022, it escalated to 1,498 million USD in 2023 and 2,332 million USD in 2024. This indicates a growing assessment that a significant portion of the recognized gross deferred tax assets may not be fully realizable in future periods.
Deferred Tax Liabilities (DTL) Trends: Total deferred tax liabilities exhibited a steady downward trend, declining from 10,231 million USD in 2020 to 8,139 million USD in 2024. The primary driver of this reduction is the decline in acquisition-related basis differences, which decreased from 8,989 million USD to 7,822 million USD over the period. Additionally, liabilities associated with depreciation and amortization saw a marked reduction, falling from 660 million USD in 2020 to 243 million USD in 2024.
Net Deferred Tax Position: The net deferred income tax liability improved from 8,939 million USD in 2020 to 6,082 million USD in 2024. The reduction in the net liability is the result of the gradual amortization of acquisition-related basis differences and the recognition of new tax assets, despite the offsetting impact of the increased valuation allowance.

Overall, the financial trajectory indicates a reduction in long-term tax obligations and a strategic shift in the composition of tax assets, characterized by a higher reliance on foreign tax attributes and business sale losses in the most recent fiscal years.

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Cigna Group, deferred tax assets and liabilities, classification

US$ in millions

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
	Deferred tax assets (reported in Other assets)	893)	1,055)	—)	—)	—)
	Deferred tax liabilities	6,975)	7,242)	7,751)	8,346)	8,939)

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

The analysis of income tax accounts reveals a sustained reduction in deferred tax obligations over the five-year period ending December 31, 2024.

Deferred Tax Liabilities: A consistent downward trajectory is observed in deferred tax liabilities, which decreased from 8,939 million US dollars in 2020 to 6,975 million US dollars in 2024. This represents a total reduction of approximately 22% over the analyzed period, suggesting a steady resolution of temporary differences between financial reporting and taxable income.
Deferred Tax Assets: Reporting for deferred tax assets is available for the most recent two years, indicating a decline from 1,055 million US dollars in 2023 to 893 million US dollars in 2024. This 15.3% decrease reflects a reduction in the value of future tax benefits available to the organization.
Net Deferred Tax Position: The organization maintains a significant net deferred tax liability position. While both assets and liabilities experienced declines toward the end of the period, the magnitude of the liabilities remains substantially higher than the assets. However, the overall net liability burden has trended lower since 2020.

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Cigna Group, Financial Data: Reported vs. Adjusted

Cigna Group, adjustments to financial statements

US$ in millions

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Adjustment to Total Assets
Total assets (as reported)	155,881)	152,761)	143,932)	154,889)	155,451)
Less: Noncurrent deferred tax assets, net	893)	1,055)	—)	—)	—)
Total assets (adjusted)	154,988)	151,706)	143,932)	154,889)	155,451)
Adjustment to Total Liabilities
Total liabilities (as reported)	114,638)	106,410)	98,981)	107,705)	105,065)
Less: Noncurrent deferred tax liabilities, net	6,975)	7,242)	7,751)	8,346)	8,939)
Total liabilities (adjusted)	107,663)	99,168)	91,230)	99,359)	96,126)
Adjustment to Shareholders’ Equity
Shareholders’ equity (as reported)	41,033)	46,223)	44,872)	47,112)	50,321)
Less: Net deferred tax assets (liabilities)	(6,082)	(6,187)	(7,751)	(8,346)	(8,939)
Shareholders’ equity (adjusted)	47,115)	52,410)	52,623)	55,458)	59,260)
Adjustment to Shareholders’ Net Income
Shareholders’ net income (as reported)	3,434)	5,164)	6,668)	5,365)	8,458)
Add: Deferred income tax expense (benefit)	(95)	(1,659)	(480)	(220)	(386)
Shareholders’ net income (adjusted)	3,339)	3,505)	6,188)	5,145)	8,072)

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

The adjustment process centered on the removal of deferred taxes results in a significant divergence between reported and adjusted financial positions, primarily affecting the liability and equity structures. While reported assets remained largely aligned with adjusted assets until 2023, the removal of deferred tax liabilities consistently enhances the adjusted shareholders' equity across the entire period analyzed.

Asset Valuation Trends: From 2020 through 2022, reported and adjusted total assets were identical. However, starting in 2023, a divergence emerged where adjusted total assets became lower than reported figures. In 2023, adjusted assets were reduced by approximately 1.05 billion USD, and in 2024, they were lower by approximately 893 million USD, suggesting the removal of specific deferred tax assets in the latter years.
Liability and Equity Adjustments: A substantial and consistent downward adjustment is observed in total liabilities. In 2020, adjusted liabilities were 8.94 billion USD lower than reported liabilities; this gap narrowed slightly to 6.98 billion USD by 2024. This reduction in liabilities directly correlates with an increase in adjusted shareholders' equity. For example, in 2020, adjusted equity exceeded reported equity by 8.94 billion USD, a pattern that persisted through 2024, where adjusted equity remained 6.08 billion USD higher than reported figures. This indicates that the removal of deferred tax liabilities provides a more robust view of the company's intrinsic equity.
Net Income Variations: Adjusted shareholders' net income remained consistently lower than reported net income from 2020 to 2024. The most significant variance occurred in 2023, where adjusted net income of 3.51 billion USD was substantially lower than the reported 5.16 billion USD. By 2024, the gap narrowed, with reported net income at 3.43 billion USD and adjusted net income at 3.34 billion USD, reflecting a general downward trend in profitability for both metrics over the five-year period.

Overall, the removal of deferred taxes reveals a structural difference in the company's financial health, showing a stronger equity position than reported, despite a downward trend in reported shareholders' equity from 50.32 billion USD in 2020 to 41.03 billion USD in 2024. The convergence of reported and adjusted net income in 2024 suggests a reduction in the volatility of tax-related adjustments to the bottom line.

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Cigna Group, Financial Ratios: Reported vs. Adjusted

Cigna Group, adjusted financial ratios

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Net Profit Margin
Reported net profit margin	1.40%	2.66%	3.72%	3.11%	5.31%
Adjusted net profit margin	1.36%	1.81%	3.45%	2.98%	5.07%
Total Asset Turnover
Reported total asset turnover	1.58	1.27	1.25	1.11	1.02
Adjusted total asset turnover	1.59	1.28	1.25	1.11	1.02
Financial Leverage
Reported financial leverage	3.80	3.30	3.21	3.29	3.09
Adjusted financial leverage	3.29	2.89	2.74	2.79	2.62
Return on Equity (ROE)
Reported ROE	8.37%	11.17%	14.86%	11.39%	16.81%
Adjusted ROE	7.09%	6.69%	11.76%	9.28%	13.62%
Return on Assets (ROA)
Reported ROA	2.20%	3.38%	4.63%	3.46%	5.44%
Adjusted ROA	2.15%	2.31%	4.30%	3.32%	5.19%

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

A comprehensive analysis of the financial ratios from 2020 to 2024 reveals a general decline in profitability and return metrics, contrasted by a steady increase in asset utilization and financial leverage. The removal of deferred taxes consistently results in lower adjusted figures for profitability and leverage, suggesting that deferred tax accounting provides a positive cushion to reported performance and modifies the perception of the capital structure.

Profitability Margins: The reported net profit margin exhibits a significant downward trajectory, decreasing from 5.31% in 2020 to 1.40% in 2024. The adjusted net profit margin follows a nearly identical path, falling from 5.07% to 1.36% over the same period. The consistent gap between reported and adjusted margins indicates that deferred tax effects marginally inflate the reported net income, though the underlying trend remains one of contracting margins.
Asset Efficiency: Total asset turnover demonstrates a consistent upward trend, improving from a ratio of 1.02 in 2020 to 1.58 in 2024 for reported values. The adjusted total asset turnover mirrors this growth almost exactly, reaching 1.59 in 2024. This suggests that the company has successfully increased its revenue generation per unit of asset, and this efficiency gain is independent of tax accounting adjustments.
Financial Leverage: Financial leverage has increased steadily, with the reported ratio rising from 3.09 in 2020 to 3.80 in 2024. A notable divergence is observed in the adjusted financial leverage, which started at 2.62 in 2020 and reached 3.29 in 2024. The fact that adjusted leverage is consistently and significantly lower than reported leverage implies that deferred tax liabilities play a substantial role in inflating the reported leverage ratio.
Return on Equity (ROE) and Return on Assets (ROA): Both ROE and ROA show a general deterioration over the five-year period. Reported ROE declined from 16.81% in 2020 to 8.37% in 2024, while adjusted ROE saw a more pronounced drop from 13.62% to 7.09%. Similarly, reported ROA fell from 5.44% to 2.20%, with the adjusted ROA decreasing from 5.19% to 2.15%. The removal of deferred taxes consistently lowers these return metrics, indicating that the reported returns are partially supported by tax-related accounting entries rather than purely operational performance.

In summary, while asset turnover has improved, the overall profitability and return on investment have weakened. The adjustment for deferred taxes reveals a more conservative financial profile, characterized by lower net margins, lower leverage, and reduced returns on both assets and equity compared to the reported figures.

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	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
As Reported
Selected Financial Data (US$ in millions)
Shareholders’ net income	3,434)	5,164)	6,668)	5,365)	8,458)
Revenues from external customers	246,148)	194,099)	179,361)	172,529)	159,157)
Profitability Ratio
Net profit margin¹	1.40%	2.66%	3.72%	3.11%	5.31%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted shareholders’ net income	3,339)	3,505)	6,188)	5,145)	8,072)
Revenues from external customers	246,148)	194,099)	179,361)	172,529)	159,157)
Profitability Ratio
Adjusted net profit margin²	1.36%	1.81%	3.45%	2.98%	5.07%

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

2024 Calculations

¹ Net profit margin = 100 × Shareholders’ net income ÷ Revenues from external customers
= 100 × 3,434 ÷ 246,148 = 1.40%

² Adjusted net profit margin = 100 × Adjusted shareholders’ net income ÷ Revenues from external customers
= 100 × 3,339 ÷ 246,148 = 1.36%

The analysis of profitability metrics from 2020 to 2024 reveals a sustained downward trend in both net income and profit margins. While a temporary recovery occurred in 2022, the overall trajectory indicates a significant contraction in bottom-line efficiency over the five-year period.

Net Income Performance: Reported shareholders' net income decreased from US$ 8,458 million in 2020 to US$ 3,434 million in 2024. Adjusted shareholders' net income followed a similar trajectory, falling from US$ 8,072 million in 2020 to US$ 3,339 million in 2024. A momentary reversal of this trend was observed in 2022, where reported net income rose to US$ 6,668 million before entering a steep decline through 2024.
Net Profit Margin Compression: Reported net profit margins experienced a consistent decline, starting at 5.31% in 2020 and ending at 1.40% in 2024. This trend reflects a reduction in the company's ability to convert revenue into actual profit after all expenses and taxes are accounted for.
Adjusted Net Profit Margin Analysis: The adjusted net profit margin shows a marked deterioration, dropping from 5.07% in 2020 to 1.36% in 2024. A particularly sharp decline occurred between 2022 and 2023, where the margin fell from 3.45% to 1.81%, indicating that operational headwinds or increased costs significantly impacted profitability during this window.
Comparative Analysis of Reported and Adjusted Metrics: The gap between reported and adjusted figures remained relatively narrow throughout the period, though the adjusted margins consistently tracked lower than the reported margins. By 2024, both metrics converged near their lowest points, confirming a broad-based erosion of profitability that is not solely attributable to one-time adjusting items.

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	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
As Reported
Selected Financial Data (US$ in millions)
Revenues from external customers	246,148)	194,099)	179,361)	172,529)	159,157)
Total assets	155,881)	152,761)	143,932)	154,889)	155,451)
Activity Ratio
Total asset turnover¹	1.58	1.27	1.25	1.11	1.02
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Revenues from external customers	246,148)	194,099)	179,361)	172,529)	159,157)
Adjusted total assets	154,988)	151,706)	143,932)	154,889)	155,451)
Activity Ratio
Adjusted total asset turnover²	1.59	1.28	1.25	1.11	1.02

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

2024 Calculations

¹ Total asset turnover = Revenues from external customers ÷ Total assets
= 246,148 ÷ 155,881 = 1.58

² Adjusted total asset turnover = Revenues from external customers ÷ Adjusted total assets
= 246,148 ÷ 154,988 = 1.59

The financial trajectory between 2020 and 2024 reveals a consistent improvement in asset utilization efficiency. While the total asset base experienced a period of volatility, the capacity to generate revenue from those assets increased steadily throughout the five-year period.

Asset Base Dynamics: Reported total assets remained relatively stable between 2020 and 2021, followed by a contraction in 2022 to 143,932 million US$. A recovery phase ensued, with assets climbing to 152,761 million US$ in 2023 and reaching a period high of 155,881 million US$ by December 31, 2024. Adjusted total assets mirrored this trend, though a divergence appeared in 2023 and 2024, where adjusted figures were slightly lower than reported totals.
Adjusted Total Asset Turnover Trend: The adjusted total asset turnover ratio demonstrates a continuous upward trend, rising from 1.02 in 2020 to 1.59 in 2024. The most significant acceleration occurred between 2023 and 2024, where the ratio increased from 1.28 to 1.59. This progression indicates a substantial increase in operational efficiency, as the organization generated more revenue per unit of adjusted asset invested.
Comparative Analysis of Reported vs. Adjusted Metrics: For the period ending December 31, 2022, there was no variance between reported and adjusted assets or turnover ratios. Starting in 2023, the adjusted total asset turnover began to exceed the reported ratio, shifting from 1.27 to 1.28 in 2023 and from 1.58 to 1.59 in 2024. This marginal increase in the adjusted ratio is attributable to the slight reduction in the adjusted asset base relative to the reported asset base during the final two years of the analysis.

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	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
As Reported
Selected Financial Data (US$ in millions)
Total assets	155,881)	152,761)	143,932)	154,889)	155,451)
Shareholders’ equity	41,033)	46,223)	44,872)	47,112)	50,321)
Solvency Ratio
Financial leverage¹	3.80	3.30	3.21	3.29	3.09
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets	154,988)	151,706)	143,932)	154,889)	155,451)
Adjusted shareholders’ equity	47,115)	52,410)	52,623)	55,458)	59,260)
Solvency Ratio
Adjusted financial leverage²	3.29	2.89	2.74	2.79	2.62

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

2024 Calculations

¹ Financial leverage = Total assets ÷ Shareholders’ equity
= 155,881 ÷ 41,033 = 3.80

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted shareholders’ equity
= 154,988 ÷ 47,115 = 3.29

An analysis of the financial position from 2020 to 2024 reveals a general increase in financial leverage, characterized by a steady decline in shareholders' equity despite relatively stable total asset levels.

Asset Performance: Total assets remained relatively stable over the five-year period, fluctuating between 143.9 billion and 155.9 billion US dollars. A contraction occurred in 2022, followed by a recovery that brought total assets back to their 2020 levels by the end of 2024. The difference between reported and adjusted total assets was negligible until 2023, after which adjusted assets were slightly lower than reported figures.
Equity Trends: A consistent downward trajectory is observed in shareholders' equity. Reported equity declined from 50.3 billion US dollars in 2020 to 41.0 billion US dollars in 2024. Adjusted shareholders' equity also decreased from 59.3 billion to 47.1 billion US dollars over the same period. The adjusted equity figures remained consistently higher than the reported figures, indicating that adjustments significantly bolster the equity base used for leverage calculations.
Financial Leverage Analysis: Both reported and adjusted financial leverage ratios exhibited an upward trend. Reported leverage increased from 3.09 in 2020 to 3.80 in 2024, while adjusted leverage rose from 2.62 to 3.29. The most significant spike in leverage occurred in 2024, correlating with the sharpest annual decline in reported shareholders' equity.
Comparison of Reported and Adjusted Ratios: The adjusted financial leverage ratio remained consistently lower than the reported ratio across all years. This disparity is driven by the substantial positive difference between adjusted and reported shareholders' equity. While the leverage profile has weakened over time, the adjusted figures suggest a more conservative capital structure than the reported figures indicate.

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	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
As Reported
Selected Financial Data (US$ in millions)
Shareholders’ net income	3,434)	5,164)	6,668)	5,365)	8,458)
Shareholders’ equity	41,033)	46,223)	44,872)	47,112)	50,321)
Profitability Ratio
ROE¹	8.37%	11.17%	14.86%	11.39%	16.81%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted shareholders’ net income	3,339)	3,505)	6,188)	5,145)	8,072)
Adjusted shareholders’ equity	47,115)	52,410)	52,623)	55,458)	59,260)
Profitability Ratio
Adjusted ROE²	7.09%	6.69%	11.76%	9.28%	13.62%

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

2024 Calculations

¹ ROE = 100 × Shareholders’ net income ÷ Shareholders’ equity
= 100 × 3,434 ÷ 41,033 = 8.37%

² Adjusted ROE = 100 × Adjusted shareholders’ net income ÷ Adjusted shareholders’ equity
= 100 × 3,339 ÷ 47,115 = 7.09%

The financial trajectory from 2020 to 2024 is characterized by a general decline in both profitability and the efficiency of capital utilization. A consistent downward trend is evident in the Adjusted Return on Equity (ROE), which reflects a reduction in the ability to generate profit relative to the adjusted equity base over the analyzed period.

Adjusted Net Income Trends: A substantial contraction is observed in adjusted shareholders' net income, which decreased from US$ 8,072 million in 2020 to US$ 3,339 million in 2024. Although a temporary increase occurred in 2022, the subsequent decline through 2024 indicates a significant erosion of adjusted earnings capacity.
Equity Base Analysis: Adjusted shareholders' equity exhibited a steady year-over-year decrease, moving from US$ 59,260 million in 2020 to US$ 47,115 million in 2024. Reported shareholders' equity followed a similar downward path, although it experienced a brief increase in 2023 before declining further in 2024.
Adjusted ROE Performance: The Adjusted ROE fell from 13.62% in 2020 to 7.09% in 2024. The compression of this ratio is primarily driven by the fact that the decline in adjusted net income was more aggressive than the reduction in adjusted equity, leading to a diminished return on invested capital.
Comparison of Reported and Adjusted Metrics: A consistent gap is maintained between reported and adjusted figures. Reported ROE remained higher than Adjusted ROE in every year of the period. This divergence is a result of adjusted shareholders' equity being consistently higher than reported equity, while adjusted net income remained lower than reported net income, creating a systematic downward pressure on the adjusted return percentage.

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	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
As Reported
Selected Financial Data (US$ in millions)
Shareholders’ net income	3,434)	5,164)	6,668)	5,365)	8,458)
Total assets	155,881)	152,761)	143,932)	154,889)	155,451)
Profitability Ratio
ROA¹	2.20%	3.38%	4.63%	3.46%	5.44%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted shareholders’ net income	3,339)	3,505)	6,188)	5,145)	8,072)
Adjusted total assets	154,988)	151,706)	143,932)	154,889)	155,451)
Profitability Ratio
Adjusted ROA²	2.15%	2.31%	4.30%	3.32%	5.19%

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

2024 Calculations

¹ ROA = 100 × Shareholders’ net income ÷ Total assets
= 100 × 3,434 ÷ 155,881 = 2.20%

² Adjusted ROA = 100 × Adjusted shareholders’ net income ÷ Adjusted total assets
= 100 × 3,339 ÷ 154,988 = 2.15%

The financial performance over the five-year period from 2020 to 2024 is characterized by a general decline in profitability and a corresponding reduction in asset efficiency. While there was a brief recovery in 2022, the overall trajectory for both net income and return on assets is downward.

Net Income Trends: Reported shareholders' net income decreased from 8,458 million in 2020 to 3,434 million in 2024. Adjusted shareholders' net income followed a similar pattern, starting at 8,072 million in 2020 and ending at 3,339 million in 2024. A notable divergence between reported and adjusted net income occurred in 2023, where adjusted net income fell more sharply to 3,505 million compared to the reported 5,164 million.
Asset Base Analysis: Total assets remained relatively stable throughout the period, with reported values fluctuating between a low of 143,932 million in 2022 and a high of 155,881 million in 2024. The consistency of the asset base suggests that the volatility observed in profitability ratios is primarily a result of fluctuations in earnings rather than significant changes in the company's resource scale.
Adjusted Return on Assets (ROA): The Adjusted ROA exhibited a significant contraction, falling from 5.19% in 2020 to 2.15% in 2024. Although the ratio improved to 4.30% in 2022, it experienced a sharp decline to 2.31% in 2023 and reached its five-year low in 2024. This trend indicates a diminishing capacity to generate adjusted earnings relative to the total asset base.

The correlation between the decline in adjusted net income and the steady asset base confirms that the erosion of the Adjusted ROA is driven by operational or non-operating headwinds impacting the bottom line, rather than an inefficient expansion of the balance sheet.

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