Citigroup (C)

Provisions for Credit Losses and for Benefits and Claims

The provision for credit losses for 2006 was $7.0 billion, down $1.2 billion, or 15%, from 2005, which in turn, was up $1.9 billion from 2004. Policyholder benefits and claims were $967 million, $867 million, and $884 million for 2006, 2005, and 2004, respectively.

Global Consumer provisions for loan losses and for policyholder benefits and claims of $7.6 billion in 2006 were down $1.5 billion, or 16% from 2005.

The declines in consumer were mainly due to lower bankruptcy filings, a stable credit environment that drove lower net credit loss ratios, and the absence of a $490 million charge to standardize the EMEA consumer loan write-off policies with the global write-off policy in the prior year.

Offsetting these declines were increases: in the Mexico cards portfolio; in Asia, primarily related to industry-wide credit conditions in the Taiwan cards market; and in Japan, primarily related to legislative and other actions affecting the consumer finance industry in that country.

The increase from 2004 of $966 million, or 12%, to $9.1 billion in 2005 was primarily due to increases in International Retail Banking, U.S. Retail Distribution, International Cards, and U.S. Commercial Business, partially offset by decreases in U.S. Cards, International Consumer Finance and U.S. Consumer Lending. Net credit losses were $7.262 billion, and the related loss ratio was 1.52% in 2006, as compared to $8.683 billion and 2.01% in 2005 and $8.471 billion and 2.13% in 2004.

Provisions for Credit Losses and for Benefits and Claims

        The provision for credit losses declined $782 million, or 30%, from the 2005 third quarter to $1.8 billion. Policyholder benefits and claims in the 2006 third quarter increased $59 million, or 27%, from the 2005 third quarter.

        Global Consumer provisions for loan losses and for benefits and claims of $2.0 billion in the 2006 third quarter were down $776 million, or 28%, from the 2005 third quarter. The declines were mainly due to lower bankruptcy filings, a continued favorable credit environment that drove lower net credit loss ratios and the absence of a $490 million charge to standardize the EMEA consumer loan write-off policies with the global write-off policy in the prior-year period. Total net credit losses were $1.815 billion, and the related loss ratio was 1.49%, in the 2006 third quarter, as compared to $2.926 billion and 2.68% in the 2005 third quarter. The consumer loan delinquency ratio (90 days or more past due) declined to 1.29% at September 30, 2006 from 1.45% at September 30, 2005. See page 57 for a reconciliation of total consumer credit information.

        The CIB provision for credit losses in the 2006 third quarter was up $64 million from the 2005 third quarter. CIB's reserve for credit losses was increased by $50 million for unfunded lending commitments in the 2006 third quarter due to higher exposures.

        Corporate cash-basis loans at September 30, 2006 and 2005 were $692 million and $1.2 billion, respectively, while the corporate Other Real Estate Owned (OREO) portfolio totaled $193 million and $153 million, respectively. The decline in corporate cash-basis loans from September 30, 2005, was related to improvements in the overall credit environment.

Provisions for Credit Losses and for Benefits and Claims

        The provision for credit losses decreased $234 million, or 13%, from the 2005 second quarter to $1.6 billion. Policyholder benefits and claims in the 2006 second quarter increased $19 million, or 9%, from the 2005 second quarter.

        Global Consumer provisions for loan losses and for benefits and claims of $1.6 billion in the 2006 second quarter were down $398 million, or 19%, from the 2005 second quarter. The declines were mainly due to lower bankruptcy filings and a continued favorable credit environment that drove lower net credit loss ratios. Total net credit losses were $1.754 billion, and the related loss ratio was 1.48%, in the 2006 second quarter, as compared to $1.797 billion and 1.68% in the 2005 second quarter. The consumer loan delinquency ratio (90 days or more past due) declined to 1.22% at June 30, 2006 from 1.70% at June 30, 2005. See page 54 for a reconciliation of total consumer credit information.

        The CIB provision for credit losses in the 2006 second quarter was up $187 million from the 2005 second quarter. CIB's reserve for credit losses was increased by $150 million for unfunded lending commitments in the 2006 second quarter due to higher exposures and an update to historical data used for certain loss estimates.

        Corporate cash-basis loans at June 30, 2006 and 2005 were $799 million and $1.6 billion, respectively, while the corporate Other Real Estate Owned (OREO) portfolio totaled $171 million and $133 million, respectively. The decline in corporate cash-basis loans from June 30, 2005, was related to improvements in the overall credit environment and write-offs, as well as sales of loans and paydowns in the portfolio.

Provisions for Credit Losses and for Benefits and Claims

        The provision for credit losses decreased $367 million, or 20%, from the 2005 first quarter to $1.4 billion. Policyholder benefits and claims in the 2006 first quarter increased $10 million, or 5%, from the 2005 first quarter.

        Global Consumer provisions for loan losses and for benefits and claims of $1.7 billion in the 2006 first quarter were down $434 million, or 21%, from the 2005 first quarter. This was due to lower bankruptcy filings and a continued favorable credit environment that drove the net credit loss ratio down. Total net credit losses were $1.633 billion, and the related loss ratio was 1.46% in the first quarter of 2006, as compared to $1.925 billion and 1.83% in the 2005 first quarter. The consumer loan delinquency ratio (90 days or more past due) decreased to 1.31% at March 31, 2006 from 1.83% at March 31, 2005. See page 50 for a reconciliation of total consumer credit information.

        Corporate and Investment Banking provision for credit losses in the 2006 first quarter was up $56 million from the 2005 first quarter. The Company increased CIB's reserve for credit losses by $50 million for unfunded lending commitments in the 2006 first quarter due to an increase in exposures and credit risk in the portfolio.

        Corporate cash-basis loans at March 31, 2006 and 2005 were $821 million and $1.7 billion, respectively, while the corporate Other Real Estate Owned (OREO) portfolio totaled $144 million and $127 million, respectively. The decrease in corporate cash-basis loans from March 31, 2005, was related to improvements in the overall credit environment and write-offs, as well as sales of loans and paydowns in the portfolio.

Provisions for Credit Losses and for Benefits and Claims

        Total provisions for credit losses and for benefits and claims were $9.0 billion, $7.1 billion and $8.9 billion in 2005, 2004 and 2003, respectively. Policyholder benefits and claims in 2005 decreased $17 million, or 2%, from 2004. The provision for credit losses increased $1.9 billion, or 31%, from 2004 to $8.2 billion in 2005.

        Global Consumer provisions for loan losses and for policyholder benefits and claims of $9.1 billion in 2005 were up $966 million, or 12% from 2004, reflecting increases in International Retail Banking, U.S. Retail Distribution, International Cards, and U.S. Commercial Business, partially offset by decreases in U.S. Cards, International Consumer Finance and U.S. Consumer Lending. Net credit losses were $8.683 billion, and the related loss ratio was 2.01% in 2005, as compared to $8.471 billion and 2.13% in 2004 and $7.555 billion and 2.22% in 2003.

        The CIB provision for credit losses in 2005 increased $933 million from 2004, which decreased $1.7 billion from 2003. The increase in the 2005 balance is primarily due to an increase in expected losses resulting from an increase in off-balance sheet exposure and related credit quality. Corporate cash-basis loans at December 31, 2005, 2004 and 2003 were $1.004 billion, $1.906 billion and $3.419 billion, respectively.