Citigroup (C)

Other Consumer

        Other Consumer includes certain treasury and other unallocated staff functions and global marketing.

		First Quarter
In millions of dollars
		2007			2006
Net interest revenue		$	(30	)	$	(47	)
Non-interest revenue			34			33
Revenues, net of interest expense		$	4		$	(14	)
Operating expenses			155			167
Income (loss) before tax benefits		$	(151	)	$	(181	)
Income taxes (benefits)			(66	)		(114	)
Net income (loss)		$	(85	)	$	(67	)

        Revenues and expenses reflect certain unallocated items that are not reported in the Global Consumer operating segments.

        The net loss increase was primarily due to the absence of the 2006 first quarter tax benefit of $40 million reflecting the resolution of the Federal Tax Audit, partially offset by higher treasury results and lower unallocated expenses.

30

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MARKETS & BANKING

        Markets & Banking provides a broad range of trading, investment banking, and commercial lending products and services to companies, governments, institutions and investors in approximately 100 countries. Markets & Banking includes Securities and Banking, Transaction Services and Other Markets & Banking.

			First Quarter						% Change
In millions of dollars
			2007			2006			1Q07 vs. 1Q06
Net interest revenue			$	2,452		$	2,234		10	%
Non-interest revenue				6,505			5,045		29
Revenues, net of interest expense			$	8,957		$	7,279		23	%
Operating expenses				5,111			4,757		7
Provision for credit losses				263			—		NM
Income before taxes and minority interest			$	3,583		$	2,522		42	%
Income taxes				947			574		65
Minority interest, net of taxes				15			19		(21	)
Net income			$	2,621		$	1,929		36	%
Revenues, net of interest expense, by region:
	U.S.		$	3,714		$	2,923		27	%
	Mexico			227			186		22
	Latin America			573			446		28
	EMEA			2,827			2,296		23
	Japan			212			296		(28	)
	Asia			1,404			1,132		24
Total revenues			$	8,957		$	7,279		23	%
Net income by region:
	U.S.		$	999		$	515		94	%
	Mexico			114			78		46
	Latin America			218			202		8
	EMEA			694			635		9
	Japan			35			85		(59	)
	Asia			561			414		36
Total net income			$	2,621		$	1,929		36	%
Average risk capital(1)			$	24,143		$	20,593		17	%
Return on risk capital(1)				44	%		38	%
Return on invested capital(1)				33	%		28	%

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(1)

See footnote 3 to the table on page 4.

NM

Not meaningful

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Other Consumer

Other Consumer includes certain treasury and other unallocated staff functions and global marketing.

 

In millions of dollars		2006				2005				2004
Net interest revenue		$	(211	)		$	(164	)		$	(128	)
Non-interest revenue			121				(94	)			684
Revenues, net of interest expense		$	(90	)		$	(258	)		$	556
Operating expenses			583				349				388
Income (loss) before tax benefits		$	(673	)		$	(607	)		$	168
Income taxes (benefits)			(322	)			(233	)			71
Net income (loss)		$	(351	)		$	(374	)		$	97

2006 vs. 2005

Revenues and expenses reflect certain unallocated items that are not reported in the Global Consumer operating segments.

The net loss decrease was primarily due to the absence of the 2005 first quarter loss on the sale of a Manufactured Housing loan portfolio of $109 million after-tax, the 2006 first quarter tax benefit of $40 million on the resolution of the Federal Tax Audit, and other tax benefits of $17 million, partially offset by SFAS 123(R) charges of $25 million after-tax and higher staff payments and legal costs.

2005 vs. 2004

Revenues and expenses reflect certain unallocated items that are not reported in the Global Consumer operating segments.

The net income decline was primarily due to the absence of a $378 million after-tax gain related to the sale of Samba in the 2004 second quarter, and the 2005 first quarter loss on the sale of a Manufactured Housing Loan portfolio of $109 million after-tax, partially offset by the absence of a $14 million after-tax write-down of assets in a non-core business in the 2004 fourth quarter and lower legal costs. Excluding the impact of the Samba gain, the decline in 2004 was primarily due to lower treasury results, including the impact of higher capital funding costs, the $14 million after-tax write-down of assets in the 2004 fourth quarter, and higher staff-related, global marketing and legal costs.

Other Consumer

        Other Consumer includes certain treasury and other unallocated staff functions and global marketing.

		Three Months Ended June 30,						Six Months Ended June 30,
In millions of dollars
		2006			2005			2006			2005
Revenues, net of interest expense		$	(19	)	$	(18	)	$	(33	)	$	(221	)
Operating expenses			127			75			294			162
Income (loss) before tax benefits		$	(146	)	$	(93	)	$	(327	)	$	(383	)
Income taxes (benefits)			(54	)		(35	)		(168	)		(149	)
Net income (loss)		($	92	)	($	58	)	($	159	)	($	234	)

2Q06 vs. 2Q05

        Revenues and expenses reflect certain unallocated items that are not reported in the Global Consumer operating segments.

        The net loss increase was primarily due to higher staff payments and higher legal costs, partially offset by lower advertising and marketing expenses.

2Q06 YTD vs. 2Q05 YTD

        The net loss decrease was primarily due to the absence of the 2005 first quarter loss on the sale of a Manufactured Housing loan portfolio of $109 million after-tax and the benefit of 2006 first quarter tax credits of $40 million, reflecting the resolution of the Federal Tax Audit, partially offset by SFAS 123(R) charges of $19 million after-tax and higher staff payments and legal costs.

34

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Other Consumer

        Other Consumer includes certain treasury and other unallocated staff functions and global marketing.

		First Quarter
In millions of dollars
		2006			2005
Revenues, net of interest expense		$	(14	)	$	(203	)
Operating expenses			167			87
Income (loss) before tax benefits		$	(181	)	$	(290	)
Income taxes (benefits)			(114	)		(114	)
Net income (loss)		$	(67	)	$	(176	)

        Revenues and expenses reflect certain unallocated items that are not reported in the Global Consumer operating segments.

        The net income increase was primarily due to the absence of the 2005 first quarter loss on the sale of a Manufactured Housing loan portfolio of $109 million after-tax and tax credits of $40 million, reflecting the resolution of the Federal Tax Audit, partially offset by SFAS 123(R) charges of $17 million after-tax and higher unallocated expenses.

30

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Other Consumer

		Three Months Ended September 30,						Nine Months Ended September 30,
In millions of dollars
		2005			2004			2005			2004
Revenues, net of interest expense		$	(26	)	$	(24	)	$	(275	)	$	517
Operating expenses			79			77			222			268
Income before tax benefits		$	(105	)	$	(101	)	$	(497	)	$	249
Income tax benefits			(40	)		(39	)		(194	)		101
Net income (loss)		$	(65	)	$	(62	)	$	(303	)	$	148

Other Consumer—which includes certain treasury and other unallocated staff functions, global marketing and other programs—reported losses of $65 million and $303 million in the 2005 third quarter and nine months, respectively, compared to a loss of $62 million and income of $148 million in the comparable 2004 periods. The decline of $451 million in the nine-month comparison was primarily due to the absence of a $378 million after-tax gain related to the sale of Samba in the 2004 second quarter, the 2005 first quarter loss on the sale of a Manufactured Housing Loan portfolio of $109 million after-tax, and higher global marketing and staff-related costs, partially offset by the absence of prior-year provisions for litigation reserves and lower legal expenses in 2005.

        Revenues, net of interest expense, and expenses reflect offsets to certain line-item reclassifications reported in other Global Consumer products.

29

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Other Consumer and the benefit of foreign currency translation, partially offset by higher credit reserve builds.  Income in Japan increased by $33 million or 6% reflecting a lower provision for credit losses, primarily driven by lower bankruptcies in

OTHER CONSUMER

 

In millions of dollars		2004			2003			2002
Revenues, net of interest expense		$	516		$	59		$	142
Operating expenses		352			256			392
Income before tax benefits		164			(197		)	(250		)
Income tax benefits		69			(73		)	(96		)
Net income (loss)		$	95		$	(124	)	$	(154	)

 

Other Consumer – which includes certain treasury and other unallocated staff functions, global marketing and other programs – reported income of $95 million in 2004 and losses of $124 million and $154 million in 2003 and 2002, respectively.  Included in the 2004 results were the gain on sale of Samba of $378 million after-tax and a $22 million after-tax release of reserves related to unused travelers checks in a non-core business, partially offset by a $14 million after-tax write-down of assets in a non-core business.  Excluding these items, the increase in losses in 2004 was primarily due to lower treasury results, including the impact of higher capital funding costs, and higher staff-related, global marketing and legal costs.  Included in the 2002 results was a $52 million after-tax gain resulting from the disposition of an equity investment in EMEA, a $25 million after-tax release of a reserve related to unused travelers checks in a non-core business, and gains from the sales of buildings in Asia.  Excluding these items, the reduction in losses in 2003 was primarily due to prior-year legal costs in connection with settlements reached during 2002 and lower global marketing costs.

 

Revenues, expenses, and the provisions for benefits, claims, and credit losses reflect offsets to certain line-item reclassifications reported in other Global Consumer operating segments.

 

11

Other Consumer

		Three Months Ended June 30,						Six Months Ended June 30,
In millions of dollars
		2005			2004			2005			2004
Revenues, net of interest expense		$	(30	)	$	557		$	(249	)	$	541
Operating expenses			65			79			143			191
Income before tax benefits			(95	)		478			(392	)		350
Income tax benefits			(38	)		174			(154	)		140
Net income (loss)		$	(57	)	$	304		$	(238	)	$	210

        Other Consumer—which includes certain treasury and other unallocated staff functions, global marketing and other programs—reported losses of $57 million and $238 million in the 2005 second quarter and six months, respectively, compared to income of $304 million and $210 million in the comparable 2004 periods. The decline of $361 million and $448 million in the 2005 second quarter and six months, respectively, was primarily due to the absence of a $378 million after-tax gain related to the sale of Samba in the 2004 second quarter. The six-month period was additionally impacted by a 2005 first quarter loss on the sale of a Manufactured Housing Loan portfolio of $109 million after-tax. Additionally, comparisons with the 2005 second quarter and six-month period were impacted by the absence of prior-year provisions for litigation reserves and lower legal expenses in the 2005 second quarter, partially offset by higher global marketing and staff-related costs.

        Revenues, net of interest expense, and expenses reflect offsets to certain line-item reclassifications reported in other Global Consumer products.

26

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CORPORATE AND INVESTMENT BANKING

		Three Months Ended June 30,								Six Months Ended June 30,
In millions of dollars								% Change								% Change
		2005			2004					2005			2004
Revenues, net of interest expense		$	5,156		$	6,067		(15	)%	$	11,193		$	11,541		(3	)%
Operating expenses			3,368			11,149		(70	)		7,036			14,169		(50	)
Provision for credit losses			(14	)		(347	)	96			(70	)		(407	)	83
Income before taxes and minority interest			1,802			(4,735	)	NM			4,227			(2,221	)	NM
Income taxes			420			(1,950	)	NM			1,155			(1,160	)	NM
Minority interest, net of tax			10			20		(50	)		21			36		(42	)
Net income (loss)		$	1,372		$	(2,805	)	NM		$	3,051		$	(1,097	)	NM
Average Risk Capital(1)		$	21,097		$	18,810		12	%	$	20,938		$	17,547		19	%
Return on Risk Capital(1)			26	%		(60	)%				29	%		(13	)%
Return on Invested Capital(1)			19	%		(48	)%				22	%		(10	)%

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(1)

See Footnote (5) to the table on page 6 and discussion of Risk Capital on page 38.

NM

Not meaningful

        CIB reported net income of $1.372 billion and $3.051 billion in the 2005 second quarter and six months, an increase of $4.177 billion and $4.148 billion from the 2004 second quarter and six months, respectively. Other Corporate in the 2004 second quarter and six months reflects the $4.95 billion after-tax WorldCom and Litigation Reserve Charge, partially offset by a $378 million after-tax gain on the sale of Samba. Capital Markets and Banking declined $459 million and $497 million in the 2005 second quarter and six months, respectively, partially offset by increases in Transaction Services of $26 million in the 2005 second quarter and $36 million in the 2005 six months.

        Capital Markets and Banking net income of $1.043 billion and $2.482 billion in the 2005 second quarter and six months, respectively, decreased $459 million, or 31%, and $497 million, or 17%, from the 2004 periods. Fixed Income Markets net income in the 2005 second quarter and six months declined as difficult capital market conditions and flattening yield curves led to lower trading results in interest rate and credit products, which were partially offset by increased revenues from foreign exchange and commodities. The decrease in the 2005 second quarter was partially offset by higher revenues from Equity Markets, driven by improved performance and growth in cash trading, derivatives products and equity finance.

        Transaction Services net income of $288 million and $533 million in the 2005 second quarter and six months increased $26 million, or 10%, from the 2004 second quarter and $36 million, or 7%, from the 2004 six months, respectively. The increases in net income in 2005 were primarily due to higher revenues reflecting growth in assets under custody and liability balances, and the positive impact of rising short-term interest rates, partially offset by higher expenses.

        The businesses of CIB are significantly affected by the levels of activity in the global capital markets which, in turn, are influenced by macroeconomic and political policies and developments, among other factors, in approximately 100 countries in which the businesses operate. Global economic and market events can have both positive and negative effects on the revenue performance of the businesses and can affect credit performance. This statement is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" on page 63.