Citigroup (C)

—           Global Cards GAAP revenues declined 10%, mainly due to higher credit losses flowing through the securitization trusts in North America.  On a managed basis, Global Cards revenues grew 3% and North America increased 6%.  Revenues in the current quarter included a $1.1 billion pre-tax gain on the sale of Redecard shares.  The prior-year period included a $439 million gain on Visa shares and a $663 million gain on the sale of Redecard shares.

—           Consumer Banking revenues declined 18%, driven by a 42% decline in investment sales, the impact from foreign exchange changes on non-U.S. dollar revenues as they are converted to U.S. dollars for reporting purposes (“impact of foreign exchange”), lower volumes, and spread compression.

—           In the Institutional Clients Group, Securities and Banking revenues were $7.2 billion, mainly due to strong trading results, partially offset by net write-downs and losses of $2.2 billion (see detail in Schedule B).

—           Transaction Services revenues declined 1% to $2.3 billion, and average deposits and other customer liability balances declined 2%.  Growth in both revenues and deposits, driven by double-digit growth in North America and strong growth in EMEA, was more than offset by the impact of foreign exchange.

—           Global Wealth Management revenues declined 20%, reflecting the adverse impact of market conditions on capital markets and investment revenues across all regions.  The revenue decline was partially offset by higher banking revenues, driven by the bank deposit program.

—           Citi adopted FASB’s recent rule changes regarding fair valuation (FAS 157) and other than temporary impairments (FAS 115).  The adoption of the changes to FAS 157 had no impact on Citi’s financial results.  The adoption of the changes to FAS 115 resulted in approximately $631 million pre-tax of lower impairment charges recorded in revenue in the current quarter.  Additionally, the cumulative effect of the changes to FAS 115, which did not impact revenues, led to a $413 million after-tax increase in retained earnings and an offset in other comprehensive income on the balance sheet.

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·             Global Cards GAAP revenues declined 40%, mainly due to lower securitization results in North America and the absence of a gain on the sale of Redecard shares recorded in the prior-year period.

·             Global Cards managed revenues declined 1%, primarily due to the absence of a gain on the sale of Redecard shares recorded in the prior-year period, partially offset by growth in average managed loans, up 6%, and improved managed net interest margin. North America managed revenues increased 7%.

·             Consumer Banking revenues grew 2%, as increased revenues in North America were partially offset by declines in Latin America and Asia. Current and historical German retail banking operations income statement items have been reclassified as discontinued operations. Related assets and liabilities have been condensed and moved to assets and liabilities of discontinued operations held for sale, respectively, on the balance sheet in the current period.

·             In the Institutional Clients Group, Securities and Banking revenues were negative $81 million, due to substantial write-downs and losses related to the credit markets. These included write-downs of $2.0 billion

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·        Global Cards GAAP revenues increased by 3%, driven by double-digit growth in purchase sales and average loans outside North America, partially offset by lower securitization results in North America.

·        Global Cards managed revenues increased 18%, driven by growth in average managed loans, up 11%, and improved managed net interest margin.

·        Consumer Banking revenues increased by 1%, driven by strong loan and deposit growth, partially offset by lower investment sales.  Revenues were also affected by a $745 million net loss from the mark-to-market on the mortgage servicing right (“MSR”) asset and related hedge in North America.

·        In the Institutional Clients Group, Securities and Banking revenues were down 94% to $539 million, due to substantial write-downs and losses related to the credit markets.  These include write-downs of $3.4 billion on sub-prime related direct exposures (see detail in Schedule B on page 9), downward credit value adjustments of $2.4 billion related to exposure to monoline insurers, write-downs of $545 million on commercial real estate positions, and write-downs of $428 million, net of underwriting fees, on funded and unfunded highly leveraged finance commitments.

·        Transaction Services revenues were up 30% to a record $2.4 billion, driven by strong growth in customer liability balances, up 15%, and assets under custody, up 13%.

·        Global Wealth Management revenues grew 4% on strength in banking and lending revenues which were partially offset by a slowdown in capital markets, particularly in Asia.  Results reflected full ownership of Nikko Cordial.

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·                  Global consumer revenues increased 16%, driven by an increase in international consumer revenues of 33%, which included a $663 million pre-tax gain on Redecard shares, and average deposit and loan growth of 23% and 30%, respectively.  U.S. consumer revenues were up 3%, driven by a $349 million pre-tax gain on Visa shares, and average deposit and managed loan growth of 4% and 9%, respectively.  Global consumer average deposits and managed loans grew 15% and 14%, respectively, and card purchase sales increased 13%.

·                  In markets & banking, securities and banking revenues were negative due to substantial write-downs and losses related to the fixed income and credit markets, including:

·                  Write-downs of $6.0 billion on sub-prime related direct exposures. These exposures on December 31, 2007, were comprised of approximately $8.0 billion of gross lending and structuring exposures and approximately $29.3 billion of net ABS CDO super senior exposures (ABS CDO super senior gross exposures of $39.8 billion).  On March 31, 2008, these were comprised of approximately $6.4 billion of gross lending and structuring exposures and approximately $22.7 billion of net ABS CDO super senior exposures (ABS CDO super senior gross exposures of $33.2 billion). See detail in Schedule A on page 11.

·                  Write-downs of $3.1 billion, net of underwriting fees, on funded and unfunded highly leveraged finance commitments.

·                  Downward credit market value adjustments of $1.5 billion related to exposure to monoline insurers.

·                  Write-downs of $1.5 billion on auction rate securities inventory, due to failed auctions and deterioration in the credit markets.

·                  Transaction services revenues were a record, up 42%, driven by strong growth in customer liability balances, up 33%, and assets under custody, up 21%.  Record revenues were achieved in all three businesses: cash management, securities services and trade.

·                  Global wealth management revenues grew 16%, mainly due to the consolidation of Nikko and double-digit revenue growth in the Private Bank.

·                  Alternative investments recorded negative revenue of $358 million, primarily due to the impact of market disruption on proprietary investments in hedge funds and SIV assets.

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·                  U.S. consumer revenues grew 6%, driven by higher business volumes with average deposits and managed loans, both up 10%.

·                  International consumer revenues increased 45%, driven by organic volume growth, the impact of recent acquisitions, a $507 million pre-tax gain on Visa Inc. shares, and a $313 million pre-tax gain on the sale of an ownership interest in Nikko Cordial’s Simplex Investment Advisors.  Average deposits and loans increased 21% and 30%, respectively, and investment sales were up 24%.

·                  In markets & banking, securities and banking revenues were negative due to write-downs and losses related to deterioration in the mortgage-backed and credit markets, including:

·                  Write-downs of $17.4 billion on sub-prime related direct exposures.   These exposures on September 30, 2007 were comprised of approximately $11.7 billion of gross lending and structuring exposures and approximately $42.9 billion of net ABS CDO super senior exposures (ABS CDO super senior gross exposures of $53.4 billion).  At December 31, 2007, sub-prime related direct exposures were comprised of approximately $8.0 billion of gross lending and structuring exposures and approximately $29.3 billion of net ABS CDO super senior exposures (ABS CDO super senior gross exposures of $39.8 billion). See detail in Schedule B on page 12.

·                  Lower revenues due to write-downs on non sub-prime securitized products and in fixed income proprietary trading.

·                  These results were partially offset by double-digit revenue growth in interest rate and currency trading, commodities, and record advisory revenues.

Transaction services revenues were a record, up 44%, driven by increased liability balances, up 35%, and higher assets under custody, up 26%.

Markets and banking international revenues included strong double-digit revenue growth in Asia, Latin America, and Japan.

·                  Global wealth management revenues increased 27%, as U.S. revenues grew 7% and international revenues more than doubled due to double-digit organic growth and increased ownership in Nikko Cordial.

·                  Alternative investments revenues declined as strong growth in client revenues was offset by lower revenues from private equity and hedge fund activities, and a lower market value on Legg Mason shares.

·                  Acquisitions contributed 7% to revenue growth during the quarter.

·                  The net interest margin increased 15 basis points versus the third quarter 2007.

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·                  Global consumer revenues increased 14%, driven by international consumer up 35%, which included a $729 million pre-tax gain on the sale of Redecard shares.  Excluding the gain, international consumer revenues increased 21%, reflecting deposit and loan growth of 18% and 29%, respectively, and higher investment sales, up 26%.  U.S. consumer revenues were flat with the prior-year period as deposit and managed loan growth of 16% and 8%, respectively, was offset by lower securitization results in cards and the absence of gains on sale of securities in the prior-year period in consumer lending.

·                  Markets & banking revenues declined 24%, reflecting record transaction services revenues, up 38%, offset by a 44% decline in securities and banking.  Securities and banking revenues declined due to write-downs and losses related to dislocations in the mortgage-backed securities and credit markets, including:

·                  Write-downs of $1.35 billion pre-tax, net of underwriting fees, on funded and unfunded highly leveraged finance commitments.

·                  Losses of $1.56 billion pre-tax, net of hedges, on the value of sub-prime mortgage-backed securities warehoused for future collateralized debt obligation (“CDO”) securitizations, CDO positions, and leveraged loans warehoused for future collateralized loan obligation (“CLO”) securitizations.

·                  Losses of $636 million pre-tax in fixed income credit trading due to significant market volatility and the disruption of historical pricing relationships.

U.S. markets & banking revenues declined 87% and international revenues grew 7%.  International revenues included strong double-digit revenue growth in Asia, Latin America, and Mexico.

·                  Global wealth management revenues increased 41%, as U.S. revenues grew 14% and international revenues more than doubled, due to double-digit organic growth and increased ownership in Nikko Cordial.

·                  Alternative Investments revenues declined 63% as strong growth in client revenues was offset by lower revenues from proprietary investment activities.

·                  Excluding acquisitions and the gain on sale of Redecard shares, total organic revenues declined 3%.

·                  The net interest margin declined 3 basis points versus the second quarter 2007.

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Operating expenses increased due to higher business volumes, compensation costs and growth due to acquisitions.  The growth in the second quarter of 2007 was favorably affected by a $300 million pretax release of litigation reserves.

Operating expenses growth was primarily driven by higher business volumes and compensation costs.  The growth in 2007 was favorably affected by the absence of a $354 million charge related to the initial adoption of SFAS 123(R) in the first quarter of 2006 and a $300 million pretax release of litigation reserves in the second quarter of 2007.

·                  Revenue growth reflected customer volume growth.  Deposits and loans grew 18% and 15%, respectively.  In global consumer, investment AUMs increased 12%.  Securities and banking ranked #1 in global debt and equity underwriting and #2 in completed M&A for the first quarter.  In global wealth management, client assets under fee-based management grew 13% and client capital in alternative investments grew 52%.

·                  Net interest revenues grew 8% as volume growth was partially offset by net interest margin compression.

·                  Excluding the impact of gray zone in Japan consumer finance, the net interest margin declined 14 basis points versus the fourth quarter 2006, with slightly less than half of the decline in trading portfolios.

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Revenues

Net interest revenue in 2006 was $39.5 billion, up $248 million, or 1%, from net interest revenue of $39.2 billion in 2005. Increases in business volumes during 2006 were offset by spread compression, as the Company’s cost of funding increased more significantly than the rates on interest-earning assets, and due to a $666 million charge against net interest revenue related to changes in Japan consumer lending laws in International Consumer Finance. Rates on the Company’s interest-earning assets were affected by competitive pricing, as well as business mix shifts. Net interest revenue in 2005 decreased $2.4 billion, or 6%, from 2004 as the impact of spread compression and competitive pricing exceeded increases in business volumes.

Total commissions and fees and administration and other fiduciary fees revenue of $26.5 billion was up $3.2 billion, or 14%, in 2006. Strong investment banking results, higher business volumes in transaction services, the integration of Legg Mason in Smith Barney, and the absence of a $565 million write-off of deferred rewards costs recorded in 2005 drove the increase. The 2005 total commissions and fees and administration and other fiduciary fees revenue of $23.3 billion was up $1.8 billion, or 8%, from 2004. The 2005 increase was attributable to the mark-to-market of Consumer Lending mortgage servicing assets, higher transactional volumes, and strong results in bank card fees and investment banking, offset by the write-off of deferred rewards costs.

Insurance premiums of $3.2 billion in 2006 were up $70 million, or 2%, from 2005 and up $406 million, or 15%, in 2005 compared to 2004. The consecutive year-over-year increases were driven by higher business volumes.

Principal transactions revenues of $7.7 billion in 2006 increased $1.3 billion, or 20%, from 2005, primarily in equity markets. Principal transactions revenue in 2005 increased $2.7 billion, or 73%, from 2004, primarily driven by the fixed income and equity markets.

Realized gains from sales of investments of $1.8 billion in 2006 were down $171 million from 2005, due to the absence of 2005 gains of $484 million on the sale of portions of St. Paul Travelers shares in Alternative Investments and of $386 million on the sale of Nikko Cordial stock in CIB, offset by 2006 gains of $252 million on the sale of $23.4 billion of mortgage-backed securities in Consumer Lending, and $225 million on the sale of the remaining St. Paul Travelers shares in Alternative Investments. The increase from 2004 of $1.1 billion was primarily attributable to the gains on the sale of Nikko Cordial stock and sales of St. Paul Travelers shares over the course of the year.

Other revenue of $11.0 billion in 2006 increased $1.4 billion, or 14%, from 2005, primarily driven by a $234 million gain on the sale of Avantel in International Retail Banking and higher replenishment gains from securitization activities as well as higher net excess spread revenues from previously securitized receivables in U.S. Cards, offset by a decrease in Alternative Investments due to lower investment performance. Other revenue increased $365 million, or 4%, from $9.2 billion in 2004 to $9.6 billion in 2005. This was due to higher securitization activity in U.S. Cards and positive investment performance in Alternative Investments offset by the absence of the $1.2 billion gain on the sale of Samba recorded in 2004.

Revenues

        Net interest revenue was $39.3 billion in 2005, down $2.3 billion, or 6%, from 2004. This, in turn, was up $4.3 billion, or 12%, from 2003. Increases in business volumes during 2005 were more than offset by spread compression, as the Company's cost of funding increased more significantly than the rates on interest-bearing assets. Rates on the Company's interest-earning assets were impacted during the year by competitive pricing (particularly in U.S. Cards and Capital Markets and Banking), as well as business mix shifts.

        Total commissions, asset management and administration fees, and other fee revenues of $23.3 billion were up $1.8 billion, or 8%, in 2005. The 2004 amount of $21.5 billion was up $1.3 billion, or 6%, from 2003. The 2005 increase primarily reflected improved global equity markets, higher transactional volume and continued strong investment banking results. Insurance premiums of $3.1 billion in 2005 were up $406 million, or 15%, from 2004 and up $271 million, or 11%, in 2004 compared to 2003. The 2005 increase primarily represents higher business volumes.

        Principal transactions revenues of $6.4 billion increased $2.7 billion, or 73%, from 2004, primarily reflecting record revenues in the fixed income and equity markets. Principal transactions revenue in 2004 decreased $1.2 billion, or 24%, from 2003, primarily reflecting decreased fixed income markets revenues related to interest rate fluctuations, positioning and lower volatility.

        Realized gains from sales of investments of $2.0 billion in 2005 were up $1.1 billion from 2004, which was up $304 million from 2003. The increase from 2004 is primarily attributable to the gain of $386 million (pretax) on the sale of Nikko Cordial stock and sales of St. Paul Travelers shares over the course of the year.

        Other revenue of $9.5 billion in 2005 increased $322 million from 2004, which was up $3.0 billion from 2003. The increase from 2004 is related to securitization and hedging gains and activity. The increase from 2003 primarily reflected the $1.2 billion gain on the sale of Samba, increased securitization gains and improved investment results.

Revenues

Net interest revenue was $41.7 billion in 2004, up $4.3 billion or 12% from 2003, which was up $2.2 billion or 6% from 2002, reflecting the positive impact of a changing rate environment, business volume growth in most markets through organic growth combined with the impact of acquisitions during the year.

Total commissions, asset management and administration fees, and other fee revenues of $21.5 billion were up $1.3 billion or 6% in 2004, primarily reflecting improved global equity markets, higher transactional volume and continued strong investment banking results.  Insurance premiums of $2.7 billion in 2004 were up 11% from year-ago levels and down $149 million in 2003 compared to 2002.  The 2004 increase primarily represents higher business volumes compared to the prior year.

Principal transactions revenues of $3.7 billion decreased $1.2 billion or 24% from 2003, primarily reflecting decreases in Global Fixed Income related to fluctuation of interest rates and positioning and lower volatility in the market, partially offset by fluctuating foreign exchange rates.  Realized gains/(losses) from sales of investments of $833 million in 2004 were up $304 million from 2003, which was up $651 million from 2002.  The increase from 2003 is attributable to the absence of prior-year losses related to the write-down of Argentina government promissory notes and gains in Treasury and Fixed Income Management Account Portfolios.  Other revenue of $9.2 billion in 2004 increased $3.0 billion from 2003, which was up $631 million from 2002.  The 2004 increase primarily reflected the $1.2 billion gain on the sale of Samba, increased securitization gains and activities and improved investment results.  The 2003 increase includes improved securitization gains and activities and stronger Private Equity results.

Revenues

Net interest revenue was $41.7 billion in 2004, up $4.3 billion or 12% from 2003, which was up $2.2 billion or 6% from 2002, reflecting the positive impact of a changing rate environment, business volume growth in most markets through organic growth combined with the impact of acquisitions during the year.

Total commissions, asset management and administration fees, and other fee revenues of $22.8 billion were up $1.4 billion or 7% in 2004, primarily reflecting improved global equity markets, higher transactional volume and continued strong investment banking results.  Insurance premiums of $2.7 billion in 2004 were up 11% from year-ago levels and down $149 million in 2003 compared to 2002.  The 2004 increase primarily represents higher business volumes compared to the prior year.

Principal transactions revenues of $3.7 billion decreased $1.2 billion or 24% from 2003, primarily reflecting decreases in Global Fixed Income related to fluctuation of interest rates and positioning and lower volatility in the market, partially offset by fluctuating foreign exchange rates.  Realized gains/(losses) from sales of investments of $835 million in 2004 were up $306 million from 2003, which was up $651 million from 2002.  The increase from 2003 is attributable to the absence of prior-year losses related to the write-down of Argentina government promissory notes and gains in Treasury and Fixed Income Management Account Portfolios.  Other revenue of $9.2 billion in 2004 increased $3.0 billion from 2003, which was up $591 million from 2002.  The 2004 increase primarily reflected the $1.2 billion gain on the sale of Samba, increased securitization gains and activities and improved investment results.  The 2003 increase includes improved securitization gains and activities and stronger Private Equity results.

Revenues ($B)

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Revenues ($B)

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Revenues

        Net interest revenue was $44.6 billion in 2004, up $4.8 billion or 12% from 2003, which was up $2.1 billion or 6% from 2002, reflecting the positive impact of a changing rate environment, business volume growth in most markets through organic growth combined with the impact of acquisitions during the year.

        Total commissions, asset management and administration fees, and other fee revenues of $23.6 billion were up $1.6 billion or 7% in 2004, primarily reflecting improved global equity markets, higher transactional volume and continued strong investment banking results. Insurance premiums of $4.0 billion in 2004 were up 7% from year-ago levels and up $339 million in 2003 compared to 2002. The 2004 increase primarily represents higher business volumes compared to the prior year.

        Principal transactions revenues of $3.8 billion decreased $1.4 billion or 27% from 2003, primarily reflecting decreases in Global Fixed Income related to fluctuation of interest rates and positioning and lower volatility in the market, partially offset by fluctuating foreign exchange rates. Realized gains/(losses) from sales of investments of $831 million in 2004 were up $321 million from 2003, which was up $995 million from 2002. The increase from 2003 is attributable to the absence of prior-year losses related to the write-down of Argentina government promissory notes and gains in Treasury and Fixed Income Management Account Portfolios. Other revenue of $9.4 billion in 2004 increased $3.1 billion from 2003, which was up $533 million from 2002. The 2004 increase primarily reflected the $1.2 billion gain on the sale of Samba, increased securitization gains and activities and improved investment results. The 2003 increase includes improved securitization gains and activities and stronger Private Equity results.