Citigroup (C)

NORTH AMERICA

NM    Not meaningful

1Q09 vs. 1Q08

        Revenues, net of interest expense, increased $8.4 billion driven by significant fixed income market revenues in S&B, which reflected strong trading results and lower net write-downs. Included in fixed income market revenues is a positive credit value adjustment (CVA) on derivative positions, excluding monolines and Citi liabilities, offset partially by net write-downs on subprime-related direct exposures, private equity and equity investment losses, and a downward CVA related to exposure to monoline insurers and other revenue write-downs and losses detailed under "Items Impacting the Securities and Banking Business."

        In Global Cards, a 17% revenue decline was mainly driven by lower securitization revenues, which reflected the impact of higher credit losses in the securitization trusts and the absence of a $349 million pretax gain on the sale of Visa shares. Purchase sales were 18% lower than the prior year reflecting a confined decline in discretionary and non-discretionary consumer spending.

        In Consumer Banking, revenues declined 12% primarily due to lower volumes and spread compression. Net Interest Revenue was 7% lower than the prior-year period, primarily driven by lower loan volumes and spread compression due largely to higher non-accrual loans and lower interest rates on loan modifications. Average loans were down 8% while deposits increased by 4% compared with the prior-year period. The decrease in loan volume was mainly due to a reduction in residential real estate loans. Non-Interest Revenue declined 24%, mainly driven by higher run-off of the servicing portfolio due to mortgage refinancing, a 47% decline in investment sales, and the absence of gains on the sale of assets in the prior-year period.

        In GWM, revenues decreased 17% primarily due to lower investment management fees and the impact of lower client transactional activity, partially offset by higher banking revenues, driven by the bank deposit program and a higher net interest margin.

        Operating expenses decreased 23%, primarily due to lower marketing costs, lower business volumes, restructuring efforts and prior-year repositioning charges, which were partially offset by higher credit management costs, the absence of a prior-year pretax Visa-related litigation reserve release and legal vehicle restructuring. Offsetting the decreases were higher collection and credit-related expenses.

        Provisions for loan losses and for benefits and claims increased 85%. Consumer Banking credit costs increased 51% mainly due to a $1.4 billion increase in net credit losses. Global Cards credit costs increased 91%, due to an increase of $498 million in net credit losses and an increase in reserve builds of $342 million. ICG increased $1.0 billion, mainly due to $1.1 billion increase in net credit losses.

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Table of Contents

—           Revenues declined 12%, largely due to lower volumes and spread compression.  Average loans were down 8%, driven by a decline in residential real estate originations and loans, and deposits were up 4%.

—           Credit costs increased 51%, due to higher net credit losses, up 88% or $1.4 billion, and a $989 million net loan loss reserve build, driven by residential real estate.  The loan loss reserve build was $44 million lower than the prior-year period.  Credit costs reflected a continued weakening of leading credit indicators, including a continued rise in delinquencies in first and second mortgages, personal, and commercial loans.  Credit costs also reflected trends in the macro-economic environment, including housing market declines.  The net

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·             Revenues declined 21%, mainly driven by lower mortgage servicing revenue and the absence of gains on the sale of assets.  Average loans were down 5%, driven by a decline in residential real estate originations and loans, and deposits were up 3%.

·             Credit costs increased 21% and included higher net credit losses, up $1.6 billion, and a $2.0 billion net loan loss reserve build across all portfolios, including additional reserves for increased numbers of loan modification adjustments to customer loans across all product lines.  The loan loss reserve build was $766 million lower than the prior-year period.  Higher credit costs reflected a weakening of leading credit indicators, including a continued rise in delinquencies in first and second mortgages, personal loans and auto loans.  Credit costs also reflected trends in the macro-economic environment, including housing market declines.  The net credit loss ratio increased 222 basis points to 3.62%.  The net loss of $2.2 billion was mainly driven by lower revenues, a $226 million restructuring charge and higher credit costs.

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·      Revenues declined 2%, primarily due to a $745 million net loss from the mark-to-market on the MSR asset and related hedge.  Excluding the impact from the MSR asset and related hedge, revenues increased 14%.  Higher expenses were primarily driven by a $92 million repositioning charge, higher credit management expenses, and acquisitions.

·      Credit costs increased by $2.6 billion, due to higher net credit losses, up $1.1 billion, and a $1.5 billion incremental net charge to increase loan loss reserves.  Higher credit costs reflected a weakening of leading credit indicators, including higher delinquencies in first and second mortgages, unsecured personal loans, and auto loans.  Credit costs also reflected trends in the macro-economic environment, including the housing market downturn.  The net credit loss ratio increased 146 basis points to 2.33%.  Higher credit costs and a net loss from the mark-to-market on the MSR asset and related hedge led to a net loss of $951 million.

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