Edgar Filing: CITIGROUP INC

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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 10-Q

ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2007
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission file number 1-9924

Citigroup Inc.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

52-1568099
(I.R.S. Employer
Identification No.)

399 Park Avenue, New York, New York 10043
(Address of principal executive offices) (Zip Code)

(212) 559-1000
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ý Accelerated filer o Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date:

Common stock outstanding as of March 31, 2007: 4,946,439,087

Available on the Web at www.citigroup.com

Citigroup Inc.

TABLE OF CONTENTS

		Page No.
Part I—Financial Information
Item 1.	Financial Statements:
	Consolidated Statement of Income (Unaudited) - Three Months Ended March 31, 2007 and 2006	80
	Consolidated Balance Sheet - March 31, 2007 (Unaudited) and December 31, 2006	81
	Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - Three Months Ended March 31, 2007 and 2006	82
	Consolidated Statement of Cash Flows (Unaudited) - Three Months Ended March 31, 2007 and 2006	83
	Consolidated Balance Sheet—Citibank, N.A. and Subsidiaries March 31, 2007 (Unaudited) and December 31, 2006	84
	Notes to Consolidated Financial Statements (Unaudited)	85
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	4 - 76
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	54, 55 57 - 59 102 - 104
Item 4.	Controls and Procedures	77
Part II—Other Information
Item 1.	Legal Proceedings	122
Item 1A.	Risk Factors	122
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	123
Item 4.	Submission of Matters to a Vote of Security Holders	124
Item 6.	Exhibits	126
Signatures		127
Exhibit Index		128

THE COMPANY

Citigroup Inc. (Citigroup and, together with its subsidiaries, the Company) is a diversified global financial services holding company. Our businesses provide a broad range of financial services to consumer and corporate customers. Citigroup has more than 200 million customer accounts and does business in more than 100 countries. Citigroup was incorporated in 1988 under the laws of the State of Delaware.

The Company is a bank holding company within the meaning of the U.S. Bank Holding Company Act of 1956 registered with, and subject to examination by, the Board of Governors of the Federal Reserve System (FRB). Some of the Company's subsidiaries are subject to supervision and examination by their respective federal and state authorities.

This quarterly report on Form 10-Q should be read in conjunction with Citigroup's 2006 Annual Report on Form 10-K.

The principal executive offices of the Company are located at 399 Park Avenue, New York, New York 10043. The headquarters' telephone number is 212 559 1000. Additional information about Citigroup is available on the Company's Web site at www.citigroup.com. Citigroup's annual report on Form 10-K, its quarterly reports on Form 10-Q, its current reports on Form 8-K, and all amendments to these reports are available free of charge through the Company's web site by clicking on the "Investor Relations" page and selecting "SEC Filings." The Securities and Exchange Commission (SEC) web site contains reports, proxy and information statements, and other information regarding the Company at www.sec.gov.

Citigroup is managed along the following segment and product lines:

(1): Disclosure includes Canada and Puerto Rico.

CITIGROUP INC. AND SUBSIDIARIES

SUMMARY OF SELECTED FINANCIAL DATA

	Three Months Ended March 31,
In millions of dollars, except per share amounts	Three Months Ended March 31,						% Change
In millions of dollars, except per share amounts	2007			2006			% Change
Net interest revenue	$	10,570		$	9,766		8	%
Non-interest revenue		14,889			12,417		20

Revenues, net of interest expense	$	25,459		$	22,183		15	%
Restructuring expense		1,377			—		—
Other operating expenses		14,194			13,358		6
Provisions for credit losses and for benefits and claims		2,967			1,673		77

Income from continuing operations before taxes and minority interest	$	6,921		$	7,152		(3	)%
Income taxes		1,862			1,537		21
Minority interest, net of taxes		47			60		(22	)

Income from continuing operations	$	5,012		$	5,555		(10	)%
Income from discontinued operations, net of taxes(1)		—			84		NM

Net Income	$	5,012		$	5,639		(11	)%

Earnings per share
Basic:
Income from continuing operations	$	1.02		$	1.13		(10	)%
Net income		1.02			1.14		(11	)
Diluted:
Income from continuing operations		1.01			1.11		(9	)
Net income		1.01			1.12		(10	)
Dividends declared per common share	$	0.54		$	0.49		10

At March 31:
Total assets	$	2,020,966		$	1,586,201		27	%
Total deposits		738,521			627,358		18
Long-term debt		310,768			227,165		37
Mandatorily redeemable securities of subsidiary trusts		9,440			6,166		53
Common stockholders' equity		121,083			113,418		7
Total stockholders' equity		122,083			114,418		7

Ratios:
Return on common stockholders' equity(2)		17.1	%		20.3	%
Return on risk capital(3)		31	%		41	%
Return on invested capital(3)		17	%		20	%

Tier 1 Capital		8.26	%		8.60	%
Total Capital		11.48			11.80
Leverage(4)		4.84			5.22

Common stockholders' equity to assets		5.99	%		7.15	%
Dividends declared(5)		53.5	%		43.8	%
Ratio of earnings to fixed charges and preferred stock dividends		1.39x			1.58x

(1): Discontinued operations relates to residual items from the Company's sale of Citigroup's Travelers Life & Annuity, which closed during the 2005 third quarter, and the Company's sale of substantially all of its Asset Management Business, which closed during the 2005 fourth quarter. See Note 2 on page 87.
(2): The return on average common stockholders' equity is calculated using net income after deducting preferred stock dividends.
(3): Risk capital is a measure of risk levels and the trade-off of risk and return. It is defined as the amount of capital required to absorb potential unexpected economic losses resulting from extremely severe events over a one-year time period. Return on risk capital is calculated as annualized income from continuing operations divided by average risk capital. Invested capital is defined as risk capital plus goodwill and intangible assets excluding mortgage servicing rights (which are a component of risk capital). Return on invested capital is calculated using income adjusted to exclude a net internal charge Citigroup levies on the goodwill and intangible assets of each business offset by each business' share of the rebate of the goodwill and intangible asset charge. Return on risk capital and return on invested capital are non-GAAP performance measures; because they are measures of risk with no basis in GAAP, there is no comparable GAAP measure to which they can be reconciled. Management uses return on risk capital to assess businesses' operational performance and to allocate Citigroup's balance sheet and risk capital capacity. Return on invested capital is used to assess returns on potential acquisitions and to compare long-term performance of businesses with differing proportions of organic and acquired growth. See page 47 for a further discussion of risk capital.
(4): Tier 1 Capital divided by adjusted average assets.
(5): Dividends declared per common share as a percentage of net income per diluted share.
NM: Not meaningful

MANAGEMENT'S DISCUSSION AND ANALYSIS

MANAGEMENT SUMMARY

Income from continuing operations of $5.012 billion in the first quarter of 2007 was down 10% from the first quarter of 2006. Diluted EPS from continuing operations was down 9%. Results for 2007 include an $871 million after-tax (or $0.17 per share) restructuring charge related to the Company's Structural Expense Review completed during the quarter.

Customer volume growth was strong, with average loans up 14%, average deposits up 19%, average interest-earning assets up 25%, and client assets under fee-based management up 12% from year-ago levels. U.S. debt, equity and equity-related underwriting increased 21% from year-ago levels. Branch activity included the opening of 99 branches during the quarter (48 internationally and 51 in the U.S.). U.S. Cards accounts were up 14% and purchase sales were up 6%.

During the first quarter of 2007, we continued to invest in expanding our distribution and enhancing our technology as we build a broad, strong foundation for future growth. We successfully completed our tender offer to become the majority (over 60%) shareholder of Nikko Cordial and closed several acquisitions, consistent with our efforts to drive growth through a balance of organic investment and targeted acquisitions and to expand internationally.

* Excludes Japan Automated Loan Machines (ALMs).

Revenues were a record $25.5 billion, up 15% from a year ago, driven by Markets & Banking, up 23%. Our international operations recorded revenue growth of 18% in the quarter, with International Consumer up 14%, International Markets & Banking up 20%, and International Global Wealth Management up 32%. U.S. Consumer revenues grew 6%, while Alternative Investments revenues declined 17%.

Net interest revenue increased 8% from last year as higher deposit and loan balances were offset by pressure on net interest margins. Net interest margin in the first quarter of 2007 was 2.46%, down 39 basis points from the first quarter of 2006 (see discussion of net interest margin on page 63).

Operating expenses increased 17% from the first quarter of 2006. Excluding the restructuring charge in 2007 and the 2006 initial adoption of SFAS 123(R), expenses were up 12% from the prior year. The relationship between revenue growth and expense growth, excluding the aforementioned impact of restructuring and SFAS 123(R), improved during the quarter. As our Structural Expense Review takes shape, we expect the pace of year-over-year expense growth (excluding acquisitions) to continue to moderate through 2007.

Income was diversified by segment and region, as shown in the charts below.


* Excludes Corporate/Other loss of $912 million.		* Excludes Corporate/Other loss of $912 million and Alternative Investments income of $222 million.

Credit costs increased $1.3 billion from a year ago, primarily driven by an increase in net credit losses of $509 million and a net charge of $597 million to build loan loss reserves. The $597 million net build compares to a net reserve release of $154 million in the prior-year period. The build was primarily due to increased reserves to reflect: a change in estimate of loan losses inherent in the initial tenor portion of the Consumer Loan Portfolio; portfolio growth, and increased delinquencies in second mortgages, in the U.S. Consumer Lending mortgage portfolio; and portfolio growth in Markets & Banking, which includes higher commitments to leveraged transactions and an increase in average loan tenor. The Global Consumer loss rate was 1.69%, a 23 basis-point increase from the first quarter of 2006.

The effective tax rate was 26.9% in the first quarter of 2007, reflecting the impacts of the restructuring charge and $131 million in tax benefits for the initial application under APB 23 relating to certain foreign subsidiaries' ability to indefinitely reinvest their earnings abroad. The 21.5% effective tax rate in the first quarter of 2006 includes the tax benefit related to the resolution of the Federal Tax Audit.

Our stockholders' equity and trust preferred securities grew to $131.5 billion at March 31, 2007. Stockholders' equity increased by $2.3 billion during the quarter to $122.1 billion. We distributed $2.7 billion in dividends to shareholders and repurchased $645 million of common stock during the quarter. As a result of the Company's recent acquisitions, the successful Nikko tender offer, and other growth opportunities, it is anticipated that we will not resume our share repurchase program during the remainder of the year. Return on common equity was 17.1% for the quarter. Citigroup maintained its "well-capitalized" position with a Tier 1 Capital Ratio of 8.26% at March 31, 2007.

Certain of the statements above are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" on page 78.

EVENTS IN 2007 AND 2006

Structural Expense Review

During the first quarter of 2007, the Company completed a review of its structural expense base in a Company-wide effort to create a more streamlined organization, reduce expense growth, and provide investment funds for future growth initiatives.

As a result of the review, a pretax restructuring charge of $1.4 billion ($871 million after-tax) was recorded in Corporate/Other during the first quarter of 2007. Additional pretax restructuring charges of $200 million are anticipated to be recognized by the end of 2007. Separate from the restructuring charge, additional implementation costs of approximately $100 million pretax are expected throughout 2007.

See Note 7 on page 92 for additional information.

Adoption of SFAS 157—Fair Value Measurements

The Company elected to early-adopt SFAS No. 157, "Fair Value Measurements" (SFAS 157), as of January 1, 2007. SFAS 157 defines fair value, establishes a consistent framework for measuring fair value and expands disclosure requirements about fair value measurements. SFAS 157 requires, among other things, Citigroup's valuation techniques used to measure fair value to maximize the use of observable inputs and minimize the use of unobservable inputs. In addition, SFAS 157 precludes the use of block discounts for instruments traded in an active market, which were previously applied to large holdings of publicly-traded equity securities, and requires the recognition of trade-date gains related to certain derivative trades that use unobservable inputs in determining the fair value. This guidance supersedes the guidance in EITF Issue No. 02-3, which prohibited the recognition of day-one gains on certain derivative trades when determining the fair value of instruments not traded in an active market. The cumulative effect of these two changes resulted in an increase to retained earnings of $75 million.

As a result of maximizing observable inputs as required by SFAS 157, Citigroup began to reflect external credit ratings as well as other observable inputs when measuring the fair value of our derivative positions. The cumulative effect of making this derivative valuation adjustment was a gain of $250 million after-tax ($402 million pre-tax, which was recorded in the Markets & Banking business), or $0.05 per diluted share, included in 2007 first quarter earnings. The primary drivers of this change were the requirement that Citigroup include its own credit rating in pricing derivatives and the elimination of a valuation adjustment, which is no longer necessary under SFAS 157.

See Note 16 on page 105 for additional information.

Adoption of SFAS 159—Fair Value Option

In conjunction with the adoption of SFAS 157, the Company early-adopted SFAS 159, "The Fair Value Option for Financial Assets and Financial Liabilities" (SFAS 159), as of January 1, 2007. SFAS 159 provides an option for most financial assets and liabilities to be reported at fair value on an instrument-by-instrument basis with changes in fair value reported in earnings. After the initial adoption, the election is made at the acquisition of a financial asset, financial liability, or a firm commitment and it may not be revoked. Under the SFAS 159 transition provisions, the Company has elected to report certain financial instruments and other items at fair value on a contract-by-contract basis, with future changes in value reported in earnings. SFAS 159 provides an opportunity to mitigate volatility in reported earnings that was caused by measuring hedged assets and liabilities that were previously required to use an accounting method other than fair value, while the related economic hedges were reported at fair value.

The adoption of SFAS 159 resulted in an after-tax decrease to January 1, 2007 retained earnings of $99 million ($157 million pretax).

See Note 16 on page 105 for additional information.

Sale of MasterCard Shares

During the first quarter of 2007, the Company recorded a $171 million after-tax gain ($268 million pretax) on the sale of approximately 2.955 million of the 4.947 million MasterCard Class B shares which were received by Citigroup as a part of the MasterCard initial public offering completed in June 2006. The after-tax gain was recorded in the following businesses:

*In millions of dollars*	Total
U.S. Cards	$	103
International Cards		42
International Retail Banking		26

Total	$	171

Credit Reserves

During the first quarter of 2007, the Company recorded a net build of $597 million to its credit reserves, consisting of a net build of $311 million in Global Consumer and a net build of $286 million in Markets & Banking.

The build of $311 million in Global Consumer was primarily due to increased reserves to reflect: a change in estimate of loan losses inherent in the initial tenor portion of the Consumer Loan portfolio; increased delinquencies in second mortgages, and portfolio growth in the U.S. Consumer Lending mortgage portfolio. Additionally, market expansion in Mexico Cards and the integration of the Credicard portfolio in Brazil added to the increase.

The build of $286 million in Markets & Banking was primarily in Securities and Banking, which had a $300 million reserve increase during the quarter due to portfolio growth which includes higher commitments to leveraged transactions and an increase in average loan tenor.

During the first quarter of 2006, the Company recorded a net release/utilization of its credit reserves of $154 million, consisting of a net release/utilization of $187 million in Global Consumer and Global Wealth Management, and a net build of $33 million in Markets & Banking.

Acquisition of Bisys

On May 2, 2007, the Company announced an agreement to acquire Bisys Group, Inc. (Bisys) for $1.45 billion. At closing, Citigroup will sell the Retirement and Insurance Services Divisions of Bisys to affiliates of J.C. Flowers & Co. LLC, making the net cost of the transaction to Citigroup approximately $800 million. Citigroup will retain the Investment Services Division of Bisys, which provides administrative services for hedge funds, mutual funds and private equity funds. The transaction is expected to close in the second half of 2007 and is subject to Bisys shareholder approval and to regulatory approvals in the U.S., Ireland and Bermuda. Bisys will be included within Citigroup's Transaction Services business.

Tender Offer for Nikko Cordial

On April 26, 2007, Citigroup completed its successful tender offer to become the majority shareholder of Nikko Cordial Corporation in Japan. Approximately 541 million shares were tendered for approximately $7.7 billion. Following the May 9, 2007 scheduled closing date Citigroup will own a total ownership stake in excess of 60%. Once the tender offer is closed, Citigroup will consolidate Nikko and its operations with the minority stake disclosed as Minority Interest.

This acquisition accelerates Citigroup's growth strategy in the world's second largest economy and is intended to provide a broad base of global products and services to Nikko Cordial's client network.

Agreement to Acquire Old Lane Partners, L.P.

On April 13, 2007, the Company announced a definitive agreement to acquire 100% of the outstanding partnership interests in Old Lane Partners, L.P. and Old Lane Partners, GP, LLC (Old Lane). Old Lane is the manager of a global, multi-strategy hedge fund and a private equity fund with total capital under management and private equity commitments of approximately $4.5 billion. Old Lane will operate as part of Citigroup's Alternative Investments (CAI) business. Following the completion of the transaction, Old Lane's Vikram Pandit will become Chief Executive Officer of CAI. The transaction is subject to customary regulatory reviews and is expected to close in the third quarter of 2007.

Acquisition of ABN AMRO Mortgage Group

On March 1, 2007, Citigroup acquired ABN AMRO Mortgage Group (AAMG), a subsidiary of LaSalle Bank Corporation and ABN AMRO Bank N.V. AAMG is a national originator and servicer of prime residential mortgage loans. As part of this acquisition, Citigroup purchased approximately $12 billion in assets, including $3 billion of mortgage servicing rights. The acquisition of AAMG added approximately 1.5 million servicing customers to the U.S. Consumer Lending portfolio.

Asia Acquisitions

Acquisition of Bank of Overseas Chinese

On April 9, 2007, Citigroup announced the agreement to acquire 100% of Bank of Overseas Chinese (BOOC) in Taiwan for approximately $427 million, subject to certain closing adjustments. BOOC offers a broad suite of corporate banking, consumer and wealth management products and services to more than one million clients through 55 branches in Taiwan.

This transaction will strengthen Citigroup's presence in Asia making it the largest international bank and 13th largest by total assets among all domestic Taiwan banks. Citigroup's acquisition of BOOC is subject to shareholder and U.S. and Taiwanese regulatory approvals and is expected to close during the second half of 2007.

Strategic Investment and Cooperation Agreement with Guangdong Development Bank

On December 17, 2006, a Citigroup-led consortium acquired an 85.6% stake in Guangdong Development Bank ("GDB"). Citigroup's share is 20% of GDB and its investment of approximately $725 million is accounted for under the equity method.

In accordance with the parties' agreement, Citigroup will have significant management influence at GDB to enhance GDB's management team and corporate governance standards, instill operational and lending best practices, improve risk management and internal controls, upgrade GDB's information technology infrastructure, and further develop GDB's customer service and product offerings.

U.K. Market Expansion

Egg

On May 1, 2007, Citigroup completed its acquisition of Egg Banking plc (Egg), the world's largest pure online bank and one of the U.K.'s leading online financial services providers, from Prudential PLC for approximately $1.127 billion. Egg has more than three million customers and offers various financial products and services including online payment and account aggregation services, credit cards, personal loans, savings accounts, mortgages, insurance and investments.

Quilter

On March 1, 2007, the Company completed the acquisition of Quilter, a U.K. wealth advisory firm with over $10.9 billion of assets under management, from Morgan Stanley. Quilter has more than 18,000 clients and 300 staff located in 10 offices throughout the U.K., Ireland and the Channel Islands. Quilter's results are included within Global Wealth Management.

Central American Acquisitions

Grupo Cuscatlan

On December 13, 2006, Citigroup announced the agreement to acquire the subsidiaries of Grupo Cuscatlan for $1.51 billion in cash and stock from Corporacion UBC Internacional S.A. Grupo Cuscatlan is one of the leading financial groups in Central America, with assets of $5.4 billion, loans of $3.5 billion, and deposits of $3.4 billion. Grupo Cuscatlan has operations in El Salvador, Guatemala, Costa Rica, Honduras and Panama. This acquisition is subject to local country regulatory approvals and is expected to close during the second quarter of 2007.

Grupo Financiero Uno

On March 5, 2007, Citigroup completed its acquisition of Grupo Financiero Uno (GFU), the largest credit card issuer in Central America, and its affiliates.

The acquisition of GFU, with $2.2 billion in assets, expands the presence of Citigroup's Latin America consumer franchise, enhances its credit card business in the region and establishes a platform for regional growth in Consumer Finance and Retail Banking.

GFU has more than one million retail clients, representing 1.1 million credit card accounts, $1.3 billion in credit card receivables and $1.5 billion in deposits in Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and Panama. GFU operates a distribution network of 75 branches and more than 100 mini-branches and points of sale.

EMEA Expansion

Purchase of 20% Equity Interest in Akbank

On January 9, 2007, Citigroup completed its purchase of a 20% equity interest in Akbank for approximately $3.1 billion. Akbank, the second-largest privately owned bank by assets in Turkey, is a premier, full-service retail, commercial, corporate and private bank.

Sabanci Holding, a 34% owner of Akbank shares, and its subsidiaries have granted Citigroup a right of first refusal or first offer over the sale of any of their Akbank shares in the future. Subject to certain exceptions, including purchases from Sabanci Holding and its subsidiaries, Citigroup has otherwise agreed not to increase its percentage ownership in Akbank.

Resolution of Federal Tax Audit

In March 2006, the Company received a notice from the Internal Revenue Service (IRS) that they had concluded the tax audit for the years 1999 through 2002 (referred to hereinafter as the "resolution of the Federal Tax Audit"). For the first quarter of 2006, the Company released a total of $657 million from its tax contingency reserves related to the resolution of the Federal Tax Audit.

The following table summarizes the 2006 first quarter tax benefits, by business, from the resolution of the Federal Tax Audit:

*In millions of dollars*	Total
Global Consumer	$	290
Markets & Banking		176
Global Wealth Management		13
Alternative Investments		58
Corporate/Other		61

Continuing Operations	$	598

Discontinued Operations		59

Total	$	657

Adoption of the Accounting for Share-Based Payments

On January 1, 2006, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 123 (revised 2004), "Share-Based Payment" (SFAS 123(R)), which replaced the existing SFAS 123 and superseded Accounting Principles Board (APB) Opinion No. 25. SFAS 123(R) requires companies to measure and record compensation expense for stock options and other share-based payments based on the instruments' fair value, reduced by expected forfeitures.

In adopting this standard, the Company conformed to recent accounting guidance that restricted or deferred stock awards issued to retirement-eligible employees who meet certain age and service requirements must be either expensed on the grant date or accrued over a service period prior to the grant date. This charge consisted of $398 million after-tax ($648 million pretax) for the immediate expensing of awards granted to retirement-eligible employees in January 2006.

The following table summarizes the SFAS 123(R) impact, by segment, on the 2006 first quarter pretax compensation expense for stock awards granted to retirement-eligible employees in January 2006 ("the 2006 initial adoption of SFAS 123(R)"):

*In millions of dollars*	*2006 First Quarter*
Global Consumer	$	121
Markets & Banking		354
Global Wealth Management		145
Alternative Investments		7
Corporate/Other		21

Total	$	648

The Company recorded the quarterly accrual for the stock awards that were granted in January 2007 during each of the quarters in 2006. During the first quarter of 2007, the Company recorded the quarterly accrual for the estimated stock awards that will be granted in January 2008.

SEGMENT, PRODUCT AND REGIONAL NET INCOME

The following tables show the net income (loss) for Citigroup's businesses on a segment and product view and on a regional view:

Citigroup Net Income—Segment and Product View

			First Quarter						% Change
*In millions of dollars*			First Quarter						% Change
*In millions of dollars*			2007			2006(1)			1Q07 vs. 1Q06
Global Consumer
	U.S. Cards		$	897		$	926		(3	)%
	U.S. Retail Distribution			388			515		(25	)
	U.S. Consumer Lending			359			437		(18	)
	U.S. Commercial Business			121			126		(4	)

		Total U.S. Consumer(2)	$	1,765		$	2,004		(12	)%

	International Cards		$	388		$	291		33	%
	International Consumer Finance			25			168		(85	)
	International Retail Banking			540			677		(20	)

		Total International Consumer	$	953		$	1,136		(16	)%

	Other		$	(85	)	$	(67	)	(27	)%

		Total Global Consumer	$	2,633		$	3,073		(14	)%

Markets & Banking
	Securities and Banking		$	2,173		$	1,618		34	%
	Transaction Services			447			323		38
	Other			1			(12	)	NM

		Total Markets & Banking	$	2,621		$	1,929		36	%

Global Wealth Management
	Smith Barney		$	324		$	168		93	%
	Private Bank			124			119		4

		Total Global Wealth Management	$	448		$	287		56	%

Alternative Investments			$	222		$	353		(37	)%
Corporate/Other				(912	)		(87	)	NM

Income from Continuing Operations			$	5,012		$	5,555		(10	)%
Income from Discontinued Operations(3)				—			84		NM

Total Net Income			$	5,012		$	5,639		(11	)%

(1): Reclassified to conform to the current period's presentation. See Note 3 on page 89 for assets by segment.
(2): U.S. disclosure includes Canada and Puerto Rico.
(3): See Note 2 on page 87.
NM: Not meaningful

Citigroup Net Income—Regional View

			First Quarter						% Change
*In millions of dollars*			First Quarter						% Change
*In millions of dollars*			2007			2006(1)			1Q07 vs. 1Q06
*U.S.(2)*
	Global Consumer		$	1,680		$	1,937		(13	)%
	Markets & Banking			999			515		94
	Global Wealth Management			361			228		58

		Total *U.S.*	$	3,040		$	2,680		13	%

*Mexico*
	Global Consumer		$	372		$	358		4	%
	Markets & Banking			114			78		46
	Global Wealth Management			12			8		50

		Total *Mexico*	$	498		$	444		12	%

*Latin America*
	Global Consumer		$	70		$	58		21	%
	Markets & Banking			218			202		8
	Global Wealth Management			3			3		—

		Total *Latin America*	$	291		$	263		11	%

*EMEA*
	Global Consumer		$	83		$	185		(55	)%
	Markets & Banking			694			635		9
	Global Wealth Management			7			3		NM

		Total *EMEA*	$	784		$	823		(5	)%

*Japan*
	Global Consumer		$	45		$	188		(76	)%
	Markets & Banking			35			85		(59	)
	Global Wealth Management			—			—		—

		Total *Japan*	$	80		$	273		(71	)%

*Asia*
	Global Consumer		$	383		$	347		10	%
	Markets & Banking			561			414		36
	Global Wealth Management			65			45		44

		Total *Asia*	$	1,009		$	806		25	%

Alternative Investments			$	222		$	353		(37	)%
Corporate/Other				(912	)		(87	)	NM

Income from Continuing Operations			$	5,012		$	5,555		(10	)%
Income from Discontinued Operations(3)				—			84		NM

Total Net Income			$	5,012		$	5,639		(11	)%

Total International			$	2,662		$	2,609		2	%

(1): Reclassified to conform to the current period's presentation.
(2): Excludes Alternative Investments and Corporate/Other, which are predominantly related to the U.S. The U.S. regional disclosure includes Canada and Puerto Rico. Global Consumer for the U.S. includes Other Consumer.
(3): See Note 2 on page 87.
NM: Not meaningful.

(THIS PAGE INTENTIONALLY LEFT BLANK)

GLOBAL CONSUMER

Citigroup's Global Consumer Group provides a wide array of banking, lending, insurance and investment services through a network of 8,140 branches, approximately 19,100 ATMs, 708 Automated Loan Machines (ALMs), the Internet, telephone and mail, and the Primerica Financial Services salesforce. Global Consumer serves more than 200 million customer accounts, providing products and services to meet the financial needs of both individuals and small businesses.

	First Quarter						% Change
*In millions of dollars*	2007			2006			1Q07 vs. 1Q06
Net interest revenue	$	7,644		$	7,224		6	%
Non-interest revenue		5,462			4,731		15

Revenues, net of interest expense	$	13,106		$	11,955		10	%
Operating expenses		6,760			6,357		6
Provisions for loan losses and for benefits and claims		2,686			1,668		61

Income before taxes and minority interest	$	3,660		$	3,930		(7	)%
Income taxes		1,017			847		20
Minority interest, net of taxes		10			10		—

Net income	$	2,633		$	3,073		(14	)%

Average assets (in billions of dollars)	$	709		$	561		26	%
Return on assets		1.51	%		2.22	%
Average risk capital(1)	$	31,653		$	27,714		14	%
Return on risk capital(1)		34	%		45	%
Return on invested capital(1)		17	%		21	%

Key Indicators—(in billions of dollars)
Average managed loans	$	566.0		$	509.0		11	%
Average deposits	$	273.4		$	243.6		12	%
EOP AUMs	$	222.2		$	199.2		12	%
Total branches		8,140			7,440		9	%

(1): See footnote 3 to the table on page 4.

U.S. CONSUMER

U.S. Consumer is composed of four businesses: Cards, Retail Distribution, Consumer Lending and Commercial Business.

	First Quarter						% Change
*In millions of dollars*	First Quarter						% Change
*In millions of dollars*	2007			2006			1Q07 vs. 1Q06
Net interest revenue	$	4,185		$	4,138		1	%
Non-interest revenue		3,529			3,122		13

Revenues, net of interest expense	$	7,714		$	7,260		6	%
Operating expenses		3,629			3,569		2
Provisions for loan losses and for benefits and claims		1,470			901		63

Income before taxes and minority interest	$	2,615		$	2,790		(6	)%
Income taxes		842			777		8
Minority interest, net of taxes		8			9		(11	)

Net income	$	1,765		$	2,004		(12	)%

Average assets (in billions of dollars)	$	499		$	379		32	%
Return on assets		1.43	%		2.14	%
Average risk capital(1)	$	17,806		$	15,069		18	%
Return on risk capital(1)		40	%		54	%
Return on invested capital(1)		20	%		24	%

Key Indicators—(in billions of dollars)
Average managed loans	$	440.0		$	400.8		10	%
Average deposits	$	119.2		$	99.1		20	%
EOP AUMs	$	83.3		$	75.0		11	%
Total branches		3,488			3,205		9	%

(1): See footnote 3 to the table on page 4.

U.S. Cards

U.S. Cards is one of the largest providers of credit cards in North America, with more than 150 million customer accounts in the United States, Canada and Puerto Rico. In addition to MasterCard (including Diners), Visa, and American Express, U.S. Cards is the largest provider of credit card services to the oil and gas industry and the leading provider of consumer private-label credit cards and commercial accounts on behalf of merchants such as The Home Depot, Federated, Sears, Dell Computer, Radio Shack, Staples and Zales Corporation.

Revenues are primarily generated from net interest revenue on receivables, interchange fees on purchase sales, securitization activities and other delinquency and servicing fees.

	First Quarter						% Change
*In millions of dollars*	First Quarter						% Change
*In millions of dollars*	2007			2006			1Q07 vs. 1Q06
Net interest revenue	$	1,031		$	1,193		(14	)%
Non-interest revenue		2,263			2,041		11

Revenues, net of interest expense	$	3,294		$	3,234		2	%
Operating expenses		1,485			1,532		(3	)
Provision for loan losses and for benefits and claims		416			395		5

Income before taxes and minority interest	$	1,393		$	1,307		7	%
Income taxes and minority interest, net of taxes		496			381		30

Net income	$	897		$	926		(3	)%

Average assets (in billions of dollars)	$	63		$	63		—
Return on assets		5.77	%		5.96	%
Average risk capital(1)	$	5,452		$	5,563		(2	)%
Return on risk capital(1)		67	%		68	%
Return on invested capital(1)		28	%		28	%

Key indicators—on a managed basis: (in billions of dollars)
Return on managed assets		2.37	%		2.59	%
Purchase sales	$	72.4		$	68.4		6	%
Managed average yield(2)		14.22	%		14.16	%
Managed net interest margin(2)		10.11	%		10.48	%

(1): See footnote 3 to the table on page 4.
(2): As a percentage of average managed loans.

1Q07 vs. 1Q06

Net Interest Revenue decreased 14% reflecting the securitization of higher margin receivables and net interest margin compression, which was partially offset by higher risk-based fees. Non-Interest Revenue increased 11% primarily reflecting a $161 million pre-tax gain on the sale of MasterCard shares, 6% growth in purchase sales, and a higher level of securitized receivables.

Operating expenses decreased slightly, primarily reflecting the timing of advertising and marketing campaigns and the absence of the charge related to the 2006 initial adoption of SFAS 123(R).

Provision for loan losses and for benefits and claims increased, primarily reflecting a lower loan loss reserve release, partially offset by lower net credit losses. The net credit loss ratio increased 31 basis points to 4.58% primarily reflecting an increase in bankruptcy filings over unusually low filing levels experienced in the first quarter of 2006.

Net Income also reflected the absence of an $89 million tax benefit resulting from the resolution of the Federal Tax Audit from the first quarter of 2006.

U.S. Retail Distribution

U.S. Retail Distribution provides banking, lending, investment and insurance products and services to customers through 993 Citibank branches, 2,495 CitiFinancial branches, the Primerica Financial Services (PFS) sales force, the Internet, direct mail and telesales. Revenues are primarily derived from net interest revenue on loans and deposits, and fees on banking, insurance and investment products.

		First Quarter						% Change
In millions of dollars		2007			2006			1Q07 vs. 1Q06
Net interest revenue		$	1,529		$	1,451		5	%
Non-interest revenue			897			845		6

Revenues, net of interest expense		$	2,426		$	2,296		6	%
Operating expenses			1,323			1,221		8
Provisions for loan losses and for benefits and claims			522			387		35

Income before taxes		$	581		$	688		(16	)%
Income taxes			193			173		12

Net income		$	388		$	515		(25	)%

Revenues, net of interest expense, by business:
	Citibank branches	$	781		$	737		6	%
	CitiFinancial branches		1,064			1,008		6
	Primerica Financial Services		581			551		5

Total revenues		$	2,426		$	2,296		6	%

Net income by business:
	Citibank branches	$	42		$	100		(58	)%
	CitiFinancial branches		215			265		(19	)
	Primerica Financial Services		131			150		(13	)

Total net income		$	388		$	515		(25	)%

Average assets (in billions of dollars)		$	74		$	66		12	%
Return on assets			2.13	%		3.16	%
Average risk capital(1)		$	3,414		$	3,459		(1	)%
Return on risk capital(1)			46	%		60	%
Return on invested capital(1)			18	%		23	%

Key indicators: (in billions of dollars)
Average loans		$	47.6		$	42.5		12	%
Average deposits		$	98.2		$	80.3		22	%
EOP Investment AUMs		$	83.3		$	75.0		11	%

(1): See footnote 3 to the table on page 4.

1Q07 vs. 1Q06

Net Interest Revenue increased primarily due to deposit and loan growth of 22% and 12%, respectively, which was partially offset by a decrease in net interest margin in higher cost deposits. Non-Interest Revenue increased as a result of higher investment product sales and higher insurance and banking fees.

Operating expense growth was primarily driven by higher volume-related expenses, increased investment spending related to the 51 new branch openings during the quarter (21 in Citibank and 30 in CitiFinancial), and costs associated with Citibank Direct. The increase in 2007 was affected favorably by the absence of the charge related to the 2006 initial adoption of SFAS 123(R).

Provisions for loan losses and for benefits and claims increased primarily due to higher customer volumes and the absence of a loan loss reserve release in the first quarter of 2006. The net credit loss ratio increased 19 basis points to 2.85%, primarily reflecting an increase in bankruptcy filings over unusually low filing levels experienced in the first quarter of 2006.

Deposit growth reflected balance increases in e-Savings accounts (which generated $12.9 billion in end-of-period deposits), certificates of deposit, partly rate-sensitive money market products and premium checking. Loan growth reflected improvements in all channels and products. Investment product sales increased 21%, driven by increased volumes.

Net income also reflected the absence of a $51 million tax reserve release resulting from the resolution of the Federal Tax Audit in the first quarter of 2006.

U.S. Consumer Lending

U.S. Consumer Lending provides home mortgages and home equity loans to prime and non-prime customers, auto financing to non-prime consumers and educational loans to students. Loans are originated throughout the United States and Canada through the Citibank, CitiFinancial and Smith Barney branch networks, Primerica Financial Services agents, third-party brokers, direct mail, the Internet and telesales. Loans are also purchased in the wholesale markets. U.S. Consumer Lending also provides mortgage servicing to a portfolio of mortgage loans owned by third parties. Revenues are composed of loan fees, net interest revenue and mortgage servicing fees.

		First Quarter						% Change
In millions of dollars		2007			2006			1Q07 vs. 1Q06
Net interest revenue		$	1,350		$	1,207		12	%
Non-interest revenue			201			53		NM

Revenues, net of interest expense		$	1,551		$	1,260		23	%
Operating expenses			491			453		8
Provisions for loan losses and for benefits and claims			503			143		NM

Income before taxes and minority interest		$	557		$	664		(16	)%
Income taxes			190			218		(13	)
Minority interest, net of taxes			8			9		(11	)

Net income		$	359		$	437		(18	)%

Revenues, net of interest expense, by business:
	Real Estate Lending	$	1,090		$	843		29	%
	Student Loans		112			117		(4	)
	Auto		349			300		16

Total revenues		$	1,551		$	1,260		23	%

Net income by business:
	Real Estate Lending	$	297		$	328		(9	)%
	Student Loans		29			38		(24	)
	Auto		33			71		(54	)

Total net income		$	359		$	437		(18	)%

Average assets (in billions of dollars)		$	313		$	209		50	%
Return on assets			0.47	%		0.85	%
Average risk capital(1)		$	6,256		$	3,732		68	%
Return on risk capital(1)			23	%		47	%
Return on invested capital(1)			16	%		27	%

(1): See footnote 3 to the table on page 4.
NM: Not meaningful

U.S. Consumer Lending (Continued)

		First Quarter						% Change
		2007			2006			1Q07 vs. 1Q06
Key indicators: (in billions of dollars)
Net interest margin:(2)
	Real Estate Lending(3)		1.89	%		2.13	%
	Student Loans		1.53	%		1.71	%
	Auto		8.18	%		9.22	%
Originations:
	Real Estate Lending	$	39.6		$	32.4		22	%
	Student Loans	$	2.8		$	2.9		(3	)%
	Auto	$	3.1		$	2.0		55

(2): As a percentage of average loans.
(3): Excludes net interest revenue for Mortgage-Backed Securities and Loans held-for-sale.

1Q07 vs. 1Q06

Net Interest Revenue increased primarily due to average loan growth of 16%, partially offset by lower net interest margins. Non-Interest Revenue increased on higher net servicing fees and higher gains on sales of mortgage-backed securities. Average loan growth reflected a strong increase in originations, with increases in real estate and auto lending of 22% and 55%, respectively.

Operating expenses increased primarily due to higher loan origination volumes. The increase in 2007 was affected favorably by the absence of the charge related to the 2006 initial adoption of SFAS 123(R).

Provisions for loan losses and for benefits and claims increased primarily as a result of increased net credit losses due to higher volumes and portfolio seasoning, increased loan loss reserves to reflect a change in estimate of loan losses inherent in the initial tenor portion of the portfolio, and increased delinquencies in second mortgages. The net credit loss ratio in real estate lending increased 14 basis points to 0.33%

Net income also reflected the absence of a $31 million tax reserve release resulting from the resolution of the Federal Tax Audit in the first quarter of 2006.

U.S. Commercial Business

U.S. Commercial Business provides equipment leasing, financing, and banking services to small- and middle-market businesses ($5 million to $500 million in annual revenues) and financing for investor-owned multifamily and commercial properties. Revenues are composed of net interest revenue and fees on loans and leases.

	First Quarter						% Change
*In millions of dollars*	First Quarter						% Change
*In millions of dollars*	2007			2006			1Q07 vs. 1Q06
Net interest revenue	$	275		$	287		(4	)%
Non-interest revenue		168			183		(8	)

Revenues, net of interest expense	$	443		$	470		(6	)%
Operating expenses		330			363		(9	)
Provision for loan losses		29			(24	)	NM

Income before taxes	$	84		$	131		(36	)%
Income taxes		(37	)		5		NM

Net income	$	121		$	126		(4	)%

Average assets (in billions of dollars)	$	49		$	41		20	%
Return on assets		1.00	%		1.25	%
Average risk capital(1)	$	2,684		$	2,315		16
Return on risk capital(1)		18	%		22	%
Return on invested capital(1)		10	%		11	%

Key indicators: (in billions of dollars):
Average earning assets	$	38.5		$	35.7		8	%

(1): See footnote 3 to the table on page 4.
NM: Not meaningful

1Q07 vs. 1Q06

Net Interest Revenue declined 4% on continued net interest margin compression across several products, partially offset by higher volumes. Average deposits and average loans increased 12% and 8% respectively, while both experienced spread compression. Revenues also reflect an increase in tax-advantaged transactions.

Operating expenses declined 9% primarily driven by improved expense controls and the prior-year impact of the initial adoption of SFAS 123(R) of $10 million.

Provision for loan losses increased primarily reflecting a current period loan loss reserve net build of $10 million and the absence of a prior-year loan loss reserve release of $38 million.

INTERNATIONAL CONSUMER

International Consumer is comprised of three businesses: Cards, Consumer Finance and Retail Banking. International Consumer operates in five geographies: Mexico, Latin America, EMEA, Japan, and Asia.

		First Quarter						% Change
*In millions of dollars*		First Quarter						% Change
*In millions of dollars*		2007			2006			1Q07 vs. 1Q06
Net interest revenue		$	3,489		$	3,133		11	%
Non-interest revenue			1,899			1,576		20

Revenues, net of interest expense		$	5,388		$	4,709		14	%
Operating expenses			2,976			2,621		14
Provisions for loan losses and for benefits and claims			1,216			767		59

Income before taxes and minority interest		$	1,196		$	1,321		(9	)%
Income taxes			241			184		31
Minority interest, net of taxes			2			1		100

Net income		$	953		$	1,136		(16	)%

Revenues, net of interest expense, by region:
	Mexico	$	1,377		$	1,149		20	%
	Latin America		591			326		81
	EMEA		1,446			1,270		14
	Japan		615			775		(21	)
	Asia		1,359			1,189		14

Total revenues		$	5,388		$	4,709		14	%

Net income by region
	Mexico	$	372		$	358		4	%
	Latin America		70			58		21
	EMEA		83			185		(55	)
	Japan		45			188		(76	)
	Asia		383			347		10

Total net income		$	953		$	1,136		(16	)%

Average assets (in billions of dollars)		$	199		$	173		15	%
Return on assets			1.94	%		2.66	%
Average risk capital(1)		$	13,847		$	12,645		10	%
Return on risk capital(1)			28	%		36	%
Return on invested capital(1)			14	%		18	%

Key indicators—(in billions of dollars)
Average managed loans		$	126.0		$	108.2		16	%
Average deposits		$	154.2		$	144.5		7	%
EOP AUMs		$	138.9		$	124.2		12	%
Total branches			4,652			4,235		10	%

(1): See footnote 3 to the table on page 4.

International Cards

International Cards provides MasterCard, Visa and Diners branded credit and charge cards, as well as private label cards and co-branded cards, to more than 30 million customer accounts in 43 countries outside of the U.S. and Canada. Revenues are primarily generated from net interest revenue on receivables, interchange fees on purchase sales and other delinquency and servicing fees.

		First Quarter						% Change
*In millions of dollars*		2007			2006			1Q07 vs. 1Q06
Net interest revenue		$	1,121		$	773		45	%
Non-interest revenue			618			507		22

Revenues, net of interest expense		$	1,739		$	1,280		36	%
Operating expenses			819			617		33
Provision for loan losses			406			312		30

Income before taxes and minority interest		$	514		$	351		46	%
Income taxes and minority interest			126			60		NM

Net income		$	388		$	291		33	%

Revenues, net of interest expense, by region:
	Mexico	$	530		$	405		31	%
	Latin America		326			96		NM
	EMEA		375			294		28
	Japan		62			70		(11	)
	Asia		446			415		7

Total revenues		$	1,739		$	1,280		36	%

Net income by region:
	Mexico	$	169		$	149		13	%
	Latin America		66			35		89
	EMEA		46			32		44
	Japan		9			21		(57	)
	Asia		98			54		81

Total net income		$	388		$	291		33	%

Average assets (in billions of dollars)		$	38		$	28		36	%
Return on assets			4.14	%		4.21	%
Average risk capital(1)		$	2,537		$	2,073		22	%
Return on risk capital(1)			62	%		57	%
Return on invested capital(1)			26	%		27	%

Key indicators: (in billions of dollars):
Purchase sales		$	21.7		$	17.4		25	%
Average yield(2)			19.58	%		18.61	%
Net interest margin(2)			14.57	%		12.90	%

(1): See footnote 3 to the table on page 4.
(2): As a percentage of average loans.
NM: Not meaningful

1Q07 vs. 1Q06

Net Interest Revenue increased 45% driven by growth in average receivables, as well as the CrediCard portfolio in Latin America, and the impact of the acquisition of Grupo Financiero Uno. Non-Interest Revenue increased 22%, primarily due to a $66 million pre-tax gain on the sale of MasterCard shares and higher purchase sales of 25%, led by growth in Latin America, Asia, and EMEA. The positive impact of foreign currency translation also contributed to increases in revenues.

Operating expenses increased, reflecting the integration of the CrediCard portfolio and the acquisition of Grupo Financiero Uno, along with volume growth across the regions, continued investment spending, higher customer activity, and the impact of foreign currency translation. The increase in 2007 was favorably affected by the absence of the charge related to the 2006 initial adoption of SFAS 123(R).

Provision for loan losses increased 30% driven by portfolio growth, target market expansion in Mexico and the integration of the CrediCard portfolio in Latin America, partially offset by the absence of a 2006 first quarter loan loss reserve build in Taiwan due to the industry-wide credit deterioration.

Net Income also reflected the absence of a 2006 first quarter $20 million tax benefit resulting from the resolution of the Federal Tax Audit.

Regional Net Income

Mexico income increased due to the gain on the sale of MasterCard shares, higher sales volumes, and average loans driven by portfolio growth and target market expansion, partially offset by higher expenses and volume related provision increases. EMEA income increased due to higher sales volumes and average loans. Latin America income increased primarily due to the CrediCard portfolio and the acquisition of Grupo Financiero Uno. Asia income increased due to higher average loan volumes and a decrease in credit costs related to credit conditions in Taiwan. Japan income declined due to lower revenues.

International Consumer Finance

International Consumer Finance provides community-based lending services through a branch network, centralized sales platforms and cross-selling initiatives with International Cards and International Retail Banking. As of March 31, 2007, International Consumer Finance maintained 2,377 sales points comprised of 1,669 branches in more than 25 countries, and 708 Automated Loan Machines (ALMs) in Japan. International Consumer Finance offers real-estate-secured loans, unsecured or partially secured personal loans, auto loans, and loans to finance consumer-goods purchases. Revenues are primarily derived from net interest revenue and fees on loan products.

			First Quarter						% Change
*In millions of dollars*			2007			2006			1Q07 vs. 1Q06
Net interest revenue			$	838		$	921		(9	)%
Non-interest revenue				52			41		27

Revenues, net of interest expense			$	890		$	962		(7	)%
Operating expenses				407			419		(3	)
Provision for loan losses and for benefits and claims				456			304		50

Income before taxes and minority interest			$	27		$	239		(89	)%
Income taxes				2			71		(97	)

Net income			$	25		$	168		(85	)%

Revenues, net of interest expense, by region:
	Mexico		$	70		$	53		32	%
	EMEA			203			184		10
	Asia (excluding Japan)			140			98		43
	Latin America			43			36		19

		Sub-total	$	456		$	371		23	%

	Japan		$	434		$	591		(27	)%

Total revenues			$	890		$	962		(7	)%

Net income (loss) by region:
	Mexico		$	10		$	10		—
	EMEA			(3	)		7		NM
	Asia (excluding Japan)			13			16		(19	)%
	Latin America			(4	)		—		NM

		Sub-total	$	16		$	33		(52	)%

	Japan		$	9		$	135		(93	)%

Total net income			$	25		$	168		(85	)%

Average assets (in billions of dollars)			$	29		$	26		12	%
Return on assets				0.35	%		2.62	%
Average risk capital(1)			$	1,187		$	1,165		2	%
Return on risk capital(1)				9	%		58	%
Return on invested capital(1)				3	%		19	%

(1): See footnote 3 to the table on page 4.
NM: Not meaningful

International Consumer Finance (Continued)

		First Quarter				% Change
		2007		2006		1Q07 vs. 1Q06
Key indicators:
Average yield(2)		17.08	%	19.06	%
Net interest margin(2)		13.59	%	16.67	%
Number of sales points:
	Other branches	1,618		1,263		28	%
	Japan branches	51		325		(84	)%
	Japan Automated Loan Machines	708		731		(3	)%

Total		2,377		2,319		3	%

(2): As a percentage of average loans.

1Q07 vs. 1Q06

Net Interest Revenue declined, driven by lower results in Japan reflecting recent changes in the operating environment and the passage of changes to consumer lending laws in the 2006 fourth quarter. Excluding Japan, Net Interest Revenue increased, driven by 25% growth in average loans and a stable net interest margin. Non-Interest Revenue increased primarily on higher insurance and other fees and the impact of foreign currency translation.

Operating expense decreased, primarily driven by lower expenses in Japan due to the repositioning of the business that included closing 84 branches and 101 automated loan machines during the quarter. Excluding Japan, expenses increased reflecting higher volume related expenses, and higher investment spending driven by 29 branch openings.

Provision for loan losses increased primarily due to higher net credit losses in Japan due to legislative and other actions affecting the consumer finance industry. Excluding Japan, increased credit costs were primarily in EMEA and Asia, driven by higher volumes, increased loan loss reserves due to portfolio growth and the absence of a prior-year release related to a portfolio sale.

The increase in average loans across all regions outside of Japan was mainly driven by higher personal-loan and real-estate-secured portfolios. In Japan, average loans declined 6% due to the impact of foreign currency translation and narrowing of the target market related to the passing of changes to consumer lending laws.

International Retail Banking

International Retail Banking delivers a wide array of banking, lending, insurance and investment services through a network of local branches and electronic delivery systems, including ATMs, call centers and the Internet. International Retail Banking serves 53 million customer accounts for individuals and small businesses. Revenues are primarily derived from net interest revenue on deposits and loans, and fees on mortgage, banking, and investment products.

		First Quarter						% Change
*In millions of dollars*		First Quarter						% Change
*In millions of dollars*		2007			2006			1Q07 vs. 1Q06
Net interest revenue		$	1,530		$	1,439		6	%
Non-interest revenue			1,229			1,028		20

Revenues, net of interest expense		$	2,759		$	2,467		12	%
Operating expenses			1,750			1,585		10
Provisions for loan losses and for benefits and claims			354			151		NM

Income before taxes and minority interest		$	655		$	731		(10	)%
Income taxes and minority interest			115			54		NM

Net income		$	540		$	677		(20	)%

Revenues, net of interest expense, by region:
	Mexico	$	777		$	691		12	%
	Latin America		222			194		14
	EMEA		868			792		10
	Japan		119			114		4
	Asia		773			676		14

Total revenues		$	2,759		$	2,467		12	%

Net income by region:
	Mexico	$	193		$	199		(3	)%
	Latin America		8			23		(65	)
	EMEA		40			146		(73	)
	Japan		27			32		(16	)
	Asia		272			277		(2	)

Total net income		$	540		$	677		(20	)%

Average assets (in billions of dollars)		$	132		$	119		11	%
Return on assets			1.66	%		2.31	%
Average risk capital(1)		$	10,123		$	9,407		8	%
Return on risk capital(1)			22	%		29	%
Return on invested capital(1)			13	%		15	%

(1): See footnote 3 to the table on page 4.
NM: Not meaningful

International Retail Banking (Continued)

	First Quarter				% Change
	2007		2006		1Q07 vs. 1Q06
Key indicators: (in billions of dollars):
Average deposits	$	154.2	$	144.5	7	%
AUMs (EOP)	$	138.9	$	124.2	12	%
Average loans	$	69.8	$	61.5	13	%

1Q07 vs. 1Q06

Net Interest Revenue increased 6% driven by 7% growth in deposits, and 13% growth in average loans. The deposit growth was led by Asia, which increased 10%, while average loan growth was led by double-digit increases in Asia, EMEA, and Latin America. The Latin America increase includes the impact of the acquisition of Grupo Financiero Uno. Non-Interest Revenue increased 20% reflecting improvements in all regions, driven by an increase in investment product sales of 33%, led by an increase in Asia of 46%. Additionally, the increase was due to a $41 million pre-tax gain on the sale of MasterCard shares, and the acquisition of Akbank in EMEA. Assets under management grew by 12%.

Operating expenses increased due to higher investment spending, which included 19 new branch openings during the quarter and 85 branches acquired as part of the acquisition of Grupo Financiero Uno, leading towards a net increase of 336 branches from the first quarter of 2006. Higher advertising and marketing costs and higher business volumes additionally drove an increase in expenses. The increase in 2007 was favorably affected by the absence of the charge related to the 2006 initial adoption of SFAS 123(R).

Provisions for loan losses and for benefits and claims increased primarily due to portfolio growth, the absence of the 2006 first quarter loan loss reserve release in Korea, and increased loan loss reserves to reflect a change in estimate of loan losses inherent in the initial tenor portion of the portfolio. Additionally, the increase was due to lower net recoveries. The 90 days past-due ratio fell from 1.21% to 0.88%.

Net Income also reflected the absence of a 2006 first quarter tax benefit in Mexico of $72 million related to APB 23 benefits and a 2006 first quarter $55 million benefit from tax reserve releases related to the resolution of the Federal Tax Audit.

Regional Net Income

Mexico income declined, driven by the absence of tax benefits related to APB 23 in the 2006 first quarter, partially offset by lower expenses that included a decrease in profit sharing, higher fee revenues, and gain on the sale of MasterCard shares. Latin America income declined primarily due to higher expenses associated with growth in Brazil and the absence of 2006 first quarter tax benefits, partially offset by strong growth in loans and deposits, up 55% and 21%, respectively. EMEA income declined primarily due to higher expenses driven by increased business volume and investment spending tied to retail bank branch expansion, a reserve build to reflect a change in estimate of loan losses inherent in the initial tenor portion of the portfolio, and lower recoveries. Partially offsetting the decline was strong growth in loans and deposits, up 16% and 9%, respectively, stronger investment product sales, and the impact of foreign currency translation. Japan income declined due to lower average loans, higher loan loss reserve, and the absence of 2006 first quarter benefit related to the resolution of the Federal Tax Audit. Asia income declined primarily due to the absence of a 2006 first quarter loan loss reserve release in Korea, and increased loan loss reserves to reflect a change in estimate of loan losses inherent in the initial tenor portion of the portfolio, and increased investment spending related to retail bank branch expansion. Partially offsetting the decline was strong growth in loans and deposits, up 14% and 10%, respectively, and an increase in investment product sales of 46%.

Other Consumer

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

	First Quarter
*In millions of dollars*	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.

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*		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	%

(1): See footnote 3 to the table on page 4.
NM: Not meaningful

Securities and Banking

Securities and Banking offers a wide array of investment and commercial banking services and products, including investment banking and advisory services, debt and equity trading, institutional brokerage, foreign exchange, structured products, derivatives, and lending. Securities and Banking revenue is generated primarily from fees for investment banking and advisory services, fees and spread on structured products, foreign exchange and derivatives, fees and interest on loans, and income earned on principal transactions.

		First Quarter						% Change
*In millions of dollars*		First Quarter						% Change
*In millions of dollars*		2007			2006			1Q07 vs. 1Q06
Net interest revenue		$	1,614		$	1,571		3	%
Non-interest revenue			5,699			4,325		32

Revenues, net of interest expense		$	7,313		$	5,896		24	%
Operating expenses			4,059			3,803		7
Provision for credit losses			258			(5	)	NM

Income before taxes and minority interest		$	2,996		$	2,098		43	%
Income taxes			812			461		76
Minority interest, net of taxes			11			19		(42	)

Net income		$	2,173		$	1,618		34	%

Revenues, net of interest expense, by region:
	U.S.	$	3,382		$	2,610		30	%
	Mexico		166			138		20
	Latin America		399			300		33
	EMEA		2,229			1,808		23
	Japan		182			271		(33	)
	Asia		955			769		24

Total revenues		$	7,313		$	5,896		24	%

Net income by region:
	U.S.	$	966		$	515		88	%
	Mexico		91			64		42
	Latin America		161			151		7
	EMEA		546			530		3
	Japan		27			80		(66	)
	Asia		382			278		37

Total net income		$	2,173		$	1,618		34	%

Average risk capital(1)		$	22,701		$	19,123		19	%
Return on risk capital(1)			39	%		34	%
Return on invested capital(1)			30	%		26	%

(1): See footnote 3 to the table on page 4.
NM: Not meaningful.

Securities and Banking (Continued)

					First Quarter						% Change
In millions of dollars					2007			2006			1Q07 vs. 1Q06
Revenue details:
	Investment banking:
		Advisory and other fees			$	429		$	295		45	%
		Equity underwriting				523			286		83
		Debt underwriting				813			713		14

			Gross Investment Banking		$	1,765		$	1,294		36	%
		Revenue allocated to the Global Wealth Management Segment:
			Equity underwriting		$	(136	)	$	(42	)	NM
			Debt underwriting			(34	)		(36	)	6	%

				Total investment banking revenue	$	1,595		$	1,216		31	%
Lending						561			411		36
Equity markets						1,483			1,179		26
Fixed income markets						3,771			3,148		20
Other Securities and Banking(1)						(97	)		(58	)	(67	)

Total Securities and Banking Revenue, net of interest expense(1)					$	7,313		$	5,896		24	%

(1): Securities and Banking revenues reflect Citigroup's portion (49%) of the results of the Nikko Citigroup Joint Venture on each respective line with an offset in Other Securities & Banking to conform to the GAAP presentation.
NM: Not meaningful

1Q07 vs. 1Q06

Revenues, net of interest expense, increased, driven by broad-based volume improvements across products and regions and by the $402 million benefit of the SFAS 157 accounting adoption. Equity Markets revenues increased, driven by strong growth globally, including cash trading, derivatives products, equity finance and prime brokerage. Fixed Income Markets revenue increases were driven by improved results across all products, including interest rates and currencies, and credit and securitized products. Investment Banking revenue growth was driven by higher equity underwriting and advisory and other fees.

Operating expenses growth was primarily driven by increased staffing and higher business volumes. The growth in 2007 was favorably affected by the absence of a $346 million charge related to the 2006 initial adoption of SFAS 123(R).

The provision for credit losses increased due to a net charge of $286 million to increase loan loss reserves. The increase in loan loss reserves was driven by portfolio growth, which includes higher commitments to leveraged transactions and an increase in average loan tenor.

Regional Net Income

Net income in the U.S. increased, driven by double-digit revenue growth in Fixed Income Markets and Underwriting and Equity Markets and Underwriting as well as Advisory. Compensation expenses were almost flat to last year due to the absence of the 2006 initial adoption of SFAS 123(R).

Mexico net income increased, driven by double-digit revenue growth in Fixed Income Markets and equity underwriting.

Latin America net income increased, driven by double-digit revenue growth in Fixed Income and Equity Markets. Revenue growth was partially offset by higher taxes due to the absence of prior-year tax benefits from the resolution of the Federal Tax Audit.

EMEA net income increased, driven by strong double-digit revenue growth across all major product lines and geographies on higher volumes and growth in customer activity. Results also include a $171 million pre-tax increase to loan loss reserves due to portfolio growth, which includes higher commitments to leveraged transactions and an increase in average loan tenor.

Net income in Japan declined primarily due to lower results in Fixed Income Markets and Equity Underwriting. Net income in Asia increased, driven by double-digit revenue growth in Investment Banking and Lending.

Transaction Services

Transaction Services is comprised of Cash Management, Trade Services and Securities & Fund Services (SFS). Cash Management and Trade Services provide comprehensive cash management and trade finance for corporations and financial institutions worldwide. SFS provides custody and fund services to investors such as insurance companies and pension funds, clearing services to intermediaries such as broker-dealers, and depository and agency/trust services to multi-national corporations and governments globally. Revenue is generated from fees for transaction processing, net interest revenue on Trade Services loans and deposits in Cash Management and SFS, and fees on assets under custody in SFS.

		First Quarter						% Change
In millions of dollars		2007			2006			1Q07 vs. 1Q06
Net interest revenue		$	838		$	663		26	%
Non-interest revenue			807			719		12

Revenues, net of interest expense		$	1,645		$	1,382		19	%
Operating expenses			1,037			949		9
Provision for credit losses			5			5		—

Income before taxes and minority interest		$	603		$	428		41	%
Income taxes			152			105		45
Minority interest, net of taxes			4			—		NM

Net income		$	447		$	323		38	%

Revenues, net of interest expense, by region:
	U.S.	$	333		$	312		7	%
	Mexico		61			48		27
	Latin America		174			146		19
	EMEA		598			488		23
	Japan		30			25		20
	Asia		449			363		24

Total revenues		$	1,645		$	1,382		19	%

Net income by region:
	U.S.	$	33		$	12		NM
	Mexico		23			14		64	%
	Latin America		54			51		6
	EMEA		150			105		43
	Japan		8			5		60
	Asia		179			136		32

Total net income		$	447		$	323		38	%

Average risk capital(1)		$	1,442		$	1,470		(2	)%
Return on risk capital(1)			126	%		89	%
Return on invested capital(1)			67	%		50	%

(1): See footnote 3 to the table on page 4.
NM: Not meaningful.

Transaction Services (Continued)

	First Quarter				% Change
	2007		2006		1Q07 vs. 1Q06
Key indicators:
Average deposits and other customer liability balances (in billions of dollars)	$	213	$	170	25	%
Assets under custody at year-end (in trillions of dollars)		10.7		8.8	22	%

Revenue details *(in millions of dollars):*
Cash management	$	981	$	792	24	%
Securities and funds services	$	507	$	438	16	%
Trade services & finance	$	157	$	152	3	%

Total revenue, net of interest expense	$	1,645	$	1,382	19	%

1Q07 vs. 1Q06

Revenues, net of interest expense, increased, reflecting growth in liability balances, assets under custody, and rising interest rates in Cash Management and SFS. Average liability balances grew 25% to $213 billion in the first quarter due to growth across all regions, reflecting positive flow from new and existing customers.

Cash Management revenue increased, reflecting growth across all regions, higher liability balances, rising interest rates, and increased revenues from new sales.

Securities & Funds Services revenue increased, reflecting growth across most regions with record new sales, increased liability balances, higher assets under custody, and transaction volumes. Assets under Custody reached $10.7 trillion, an increase of $1.9 trillion, or 22%, on continued momentum from new sales as well as global markets.

Trade Services & Finance revenue increased primarily due to growth in Asia Pacific, partially offset by EMEA and Latin America.

Operating expenses increased due to organic business growth, acquisitions, and investment spending.

Regional Net Income

Net income in the U.S. increased, primarily due to growth in liability balances and rising interest rates.

Mexico net income increased primarily due to growth in liability balances and rising interest rates.

Latin America net income increased primarily due to increased revenues from new sales, growth in liability balances and rising interest rates.

EMEA net income increased primarily due to increased revenue from new sales, growth in liability balances and assets under custody, rising interest rates and strong volumes, which drove growth in Cash Management, SFS, and Trade Services.

Asia net income increased primarily due to increased revenue from new sales, higher customer volumes, and growth in liability balances and assets under custody and rising interest rates.

Japan net income increased primarily due to increased revenue from new sales, growth in liability balances and assets under custody, and rising interest rates.

Other Markets & Banking

Other Markets & Banking includes offsets to certain line items reported in other Markets & Banking segments, certain non-recurring items and tax amounts not allocated to Markets & Banking products.

	First Quarter
In millions of dollars	2007			2006
Net interest revenue		—			—
Non-interest revenue	$	(1	)	$	1

Revenues, net of interest expense	$	(1	)	$	1
Operating expenses		15			5

Income (loss) before income taxes (benefits)	$	(16	)	$	(4	)
Income taxes (benefits)		(17	)		8

Net income (loss)	$	1		$	(12	)

GLOBAL WEALTH MANAGEMENT

Global Wealth Management is comprised of the Smith Barney Private Client businesses (including Citigroup Wealth Advisors outside the U.S.), Citigroup Private Bank, and Citigroup Investment Research.

		First Quarter						% Change
*In millions of dollars*		2007			2006			1Q07 vs. 1Q06
Net interest revenue		$	529		$	460		15	%
Non-interest revenue			2,289			2,023		13

Revenues, net of interest expense		$	2,818		$	2,483		13	%
Operating expenses			2,102			2,055		2
Provision for loan losses			17			5		NM

Income before taxes		$	699		$	423		65	%
Income taxes			251			136		85

Net income		$	448		$	287		56	%

Revenues, net of interest expense by region:
	U.S.	$	2,385		$	2,154		11	%
	Mexico		36			31		16
	Latin America		55			43		28
	EMEA		108			75		44
	Japan		—			—		—
	Asia		234			180		30

Total revenues		$	2,818		$	2,483		13	%

Net income (loss) by region:
	U.S.	$	361		$	228		58	%
	Mexico		12			8		50
	Latin America		3			3		—
	EMEA		7			3		NM
	Japan		—			—		—
	Asia		65			45		44

Total net income		$	448		$	287		56	%

Average risk capital(1)		$	2,879		$	2,539		13	%
Return on risk capital(1)			63	%		46	%
Return on invested capital(1)			40	%		29	%

(1): See footnote 3 to the table on page 4.
NM: Not meaningful.

GLOBAL WEALTH MANAGEMENT (Continued)

	First Quarter				% Change
	2007		2006		1Q07 vs. 1Q06
Key indicators: (in billions of dollars)
Total assets under fee-based management	$	418	$	369	13	%
Total client assets	$	1,493	$	1,347	11	%
Net client asset flows	$	6	$	3	100	%
Financial advisors (FA) / bankers (actual number)		13,605		13,837	(2	)%
Annualized revenue per FA / banker (in thousands of dollars)	$	837	$	715	17	%
Average deposits and other customer liability balances	$	113	$	99	14	%
Average loans	$	46	$	40	15	%

(THIS PAGE INTENTIONALLY LEFT BLANK)

Smith Barney

Smith Barney provides investment advice, financial planning and brokerage services to affluent individuals, companies, and non-profits through a network of more than 13,000 Financial Advisors in more than 600 offices, primarily in the U.S. Smith Barney generates revenue from managing client assets, acting as a broker for clients in the purchase and sale of securities, financing customers' securities transactions and other borrowing needs through lending, and through the sale of mutual funds and alternative investments.

		First Quarter						% Change
In millions of dollars		2007			2006			1Q07 vs. 1Q06
Net interest revenue		$	285		$	209		36	%
Non-interest revenue			1,961			1,778		10

Revenues, net of interest expense		$	2,246		$	1,987		13	%
Operating expenses			1,724			1,720		—
Provisions for loan losses			—			1		(100	)

Income before taxes		$	522		$	266		96	%
Income taxes			198			98		NM

Net income		$	324		$	168		93	%

Revenues, net of interest expense by region:
	U.S.	$	2,184		$	1,943		12	%
	Mexico		—			—		—
	Latin America		—			—		—
	EMEA		14			5		NM
	Japan		—			—		—
	Asia		48			39		23

Total revenues		$	2,246		$	1,987		13	%

Net income (loss) by region:
	U.S.	$	318		$	162		96	%
	Mexico		—			—		—
	Latin America		—			—		—
	EMEA		(1	)		1		NM
	Japan		—			—		—
	Asia		7			5		40

Total net income		$	324		$	168		93	%

Average risk capital(1)		$	1,743		$	1,457		20	%
Return on risk capital(1)			75	%		47	%
Return on invested capital(1)			39	%		24	%

(1): See footnote 3 to the table on page 4.
NM: Not meaningful

Smith Barney (Continued)

	First Quarter				% Change
	2007		2006		1Q07 vs. 1Q06
Key indicators: (in billions of dollars)
Total assets under fee-based management	$	362	$	319	13	%
Total client assets	$	1,277	$	1,167	9	%
Financial advisors (FA) (actual numbers)		13,009		13,321	(2	)%
Annualized revenue per FA (in thousands of dollars)	$	697	$	597	17	%

1Q07 vs. 1Q06

Smith Barney net income of $324 million in the first quarter of 2007 increased $156 million, or 93%, from 2006.

Revenues, net of interest expense, of $2.246 billion in the first quarter of 2007 increased $259 million, or 13%, from the prior-year period, primarily due to a 17% increase in fee-based revenues reflecting an advisory-based strategy and a 7% increase in transactional revenues due to higher syndicate sales.

Total assets under fee-based management were $362 billion as of March 31, 2007, up $43 billion, or 13%, from the prior-year period. Total client assets, including assets under fee-based management, of $1,277 billion in the first quarter of 2007 increased $110 billion, or 9%, compared to the prior-year quarter, reflecting organic growth and the addition of Quilter client assets as of March 31, 2007. Net inflows were $7 billion in the first quarter of 2007 compared to $3 billion in the prior-year quarter. Smith Barney had 13,009 financial advisors as of March 31, 2007, compared with 13,321 as of March 31, 2006. Annualized revenue per financial advisor of $697,000 increased 17% from the prior-year quarter.

Operating expenses of $1.724 billion in the first quarter of 2007 increased $4 million from the prior-year quarter. The expense increase in 2007 was favorably affected by the absence of the charge related to the 2006 initial adoption of SFAS 123(R) of $129 million. Excluding this charge, the increase in expenses was primarily driven by higher variable compensation associated with increased revenue.

Private Bank

Private Bank provides personalized wealth management services for high-net-worth clients in 33 countries and territories. These services include comprehensive investment management (investment funds management, capital markets solutions, and trust, fiduciary and custody services), investment finance (credit services including real estate financing, commitments and letters of credit) and banking services (deposit, checking and savings accounts, as well as cash management and other traditional banking services).

		First Quarter						% Change
In millions of dollars		2007			2006			1Q07 vs. 1Q06
Net interest revenue		$	244		$	251		(3	)%
Non-interest revenue			328			245		34

Revenues, net of interest expense		$	572		$	496		15	%
Operating expenses			378			335		13
Provision for loan losses			17			4		NM

Income before taxes		$	177		$	157		13	%
Income taxes			53			38		39

Net income		$	124		$	119		4	%

Revenues, net of interest expense, by region:
	U.S.	$	201		$	211		(4	)%
	Mexico		36			31		16
	Latin America		55			43		28
	EMEA		94			70		34
	Japan		—			—		—
	Asia		186			141		31

Total revenues		$	572		$	496		15	%

Net income by region:
	U.S.	$	43		$	66		(35	)%
	Mexico		12			8		50
	Latin America		3			3		—
	EMEA		8			2		NM
	Japan		—			—		—
	Asia		58			40		45

Total net income		$	124		$	119		4	%

Average risk capital(1)		$	1,136		$	1,082		5	%
Return on risk capital(1)			44	%		45	%
Return on invested capital(1)			40	%		42	%

(1): See footnote 3 to the table on page 4.
NM: Not meaningful.

Private Bank (Continued)

	First Quarter					% Change
	2007			2006		1Q07 vs. 1Q06
Key indicators: (in billions of dollars)
Total assets under fee-based management	$	56		$	50	12	%
Total client assets	$	216		$	180	20	%
Net client asset flows	$	(1	)	$	—	—
Bankers		596			516	16	%
Annualized revenue per bankers (in thousands of dollars)	$	4,047		$	3,898	4	%
Average deposits and other customer liability balances	$	61		$	48	27	%
Average loans	$	44		$	38	16	%

1Q07 vs. 1Q06

Revenues, net of interest expense, increased due to strong growth across Asia, EMEA, Mexico and Latin America.

U.S. revenue decreased, primarily driven by a decrease in lending and banking spreads, partially offset by increases in lending and banking volumes.

Operating expenses of $378 million in the first quarter of 2007 increased $43 million from the prior-year quarter. The expense increase in 2007 was favorably affected by the absence of the charge related to the 2006 initial adoption of SFAS 123(R) of $16 million. Excluding this charge, the increase in expenses was primarily driven by higher incentive compensation from higher revenue and investment spending to expand on-shore markets.

Provision for loan losses increased primarily due to portfolio growth.

End of period client assets increased $36 billion, or 20%, while average loans increased $6 billion, or 16%, primarily in EMEA and the U.S.

ALTERNATIVE INVESTMENTS

Alternative Investments (AI) manages capital on behalf of Citigroup, as well as for third-party institutional and high-net-worth investors. AI is an integrated alternative investment platform that manages a wide range of products across five asset classes, including private equity, hedge funds, real estate, structured products and managed futures. AI's business model is to enable its 14 investment centers to retain the entrepreneurial qualities required to capitalize on evolving opportunities, while benefiting from the intellectual, operational and financial resources of Citigroup.

		First Quarter						% Change
*In millions of dollars*		First Quarter						% Change
*In millions of dollars*		2007			2006			1Q07 vs. 1Q06
Net interest revenue		$	(20	)	$	3		NM
Non-interest revenue			582			672		(13	)%

Total revenues, net of interest expense		$	562		$	675		(17	)%

Net realized and net change in unrealized gains		$	444		$	563		(21	)%
Fees, dividends and interest			35			49		(29	)
Other			(43	)		(28	)	(54	)

Total proprietary investment activities revenues		$	436		$	584		(25	)%
Client revenues(1)			126			91		38

Total revenues, net of interest expense		$	562		$	675		(17	)%
Operating expenses			180			181		(1	)
Provision for loan losses			1			—		NM

Income before taxes and minority interest		$	381		$	494		(23	)%

Income taxes		$	138		$	111		24	%
Minority interest, net of taxes			21			30		(30	)

Net income		$	222		$	353		(37	)%

Average risk capital(2)		$	4,086		$	4,547		(10	)%
Return on risk capital(2)			22	%		32	%
Return on invested capital(2)			19	%		28	%

Revenue by product:
Client(1)		$	126		$	91		38	%

	Private Equity	$	361		$	213		69	%
	Hedge Funds		47			107		(56	)
	Other		28			264		(89	)

Proprietary		$	436		$	584		(25	)%

Total		$	562		$	675		(17	)%

(1): Includes fee income.
(2): See footnote 3 to the table on page 4.
NM: Not meaningful.

ALTERNATIVE INVESTMENTS (Continued)

		First Quarter				% Change
		2007		2006		1Q07 vs. 1Q06
Key indicators: (in billions of dollars)
Capital under management:
	Client	$	42.9	$	28.2	52	%
	Proprietary		10.8		11.1	(3	)

Total		$	53.7	$	39.3	37	%

1Q07 vs. 1Q06

Total proprietary revenues, net of interest expense, were composed of revenues from private equity of $361 million, hedge funds of $47 million and other investment activity of $28 million. Private equity revenue increased $148 million from the first quarter of 2006, primarily driven by gains from the sale of portfolio assets. Hedge fund revenue declined $60 million due to lower investment performance. Other investment activities revenue decreased $236 million from the first quarter of 2006, largely due to the absence of prior-year gains from the sale of Citigroup's investment in The Travelers Companies shares, partially offset by real estate investment returns. Client revenues increased $35 million, reflecting increased management fees from a 52% growth in average client capital under management.

Minority interest, net of tax, declined on the absence of prior-year private equity gains related to underlying investments held by consolidated majority-owned legal entities. The impact of minority interest is reflected in fees, dividends, and interest, and net realized and net change in unrealized gains/(losses) consistent with proceeds received by minority interests.

Net Income in the first quarter 2006 reflected a tax benefit of $58 million resulting from the resolution of the Federal Tax Audit.

Proprietary capital under management decreased $0.3 billion from the first quarter of 2006, primarily driven by the sale of Citigroup's remaining holdings of MetLife shares, which were partially offset by investments in hedge funds, private equity and real estate.

Client capital under management increased $14.7 billion, or 52%, from the first quarter of 2006 due to inflows from institutional and high-net-worth clients in private equity, real estate and hedge funds.

Beginning January 1, 2007, the change in fair value of the Company's Legg Mason securities are marked-to-market through earnings. See Notes 11 and 16 on page 95 and 105, respectively.

CORPORATE/OTHER

Corporate/Other includes treasury results, the 2007 first quarter restructuring charge, unallocated corporate expenses, offsets to certain line-item reclassifications reported in the business segments (inter-segment eliminations), the results of discontinued operations and unallocated taxes.

	First Quarter
*In millions of dollars*	First Quarter
*In millions of dollars*	2007			2006
Revenues, net of interest expense	$	16		$	(209	)
Restructuring expense		1,377			—
Other operating expense		41			8

Operating expenses		1,418			8

Loss from continuing operations before taxes and minority interest	$	(1,402	)	$	(217	)
Income tax benefits		(491	)		(131	)
Minority interest, net of taxes		1			1

Loss from continuing operations	$	(912	)	$	(87	)
Income from discontinued operations		—			84

Net loss	$	(912	)	$	(3	)

1Q07 vs. 1Q06

Revenues, net of interest expense, increased, primarily due to a gain on the sale of certain corporate-owned assets and improved treasury results as long-term funding rates decreased.

Restructuring expense. See Note 7 on page 92 for details on the 2007 first quarter restructuring charge.

Other operating expenses increased, primarily due to increased staffing and technology costs.

Income tax benefits increased due to the higher pretax loss in the current year, offset by a prior-year tax reserve release of $61 million relating to the resolution of the Federal Tax Audit.

Discontinued operations represent the operations in the Company's Sale of the Asset Management Business to Legg Mason Inc., and the Sale of the Life Insurance and Annuities Business. For 2006, income from discontinued operations included a gain from the Sale of the Asset Management Business in Poland, as well as a tax reserve release of $59 million relating to the resolution of the Federal Tax Audit. See Note 2 on page 87.

MANAGING GLOBAL RISK

Citigroup's risk management framework balances strong corporate oversight with well-defined independent risk management functions within each business. The Citigroup risk management framework is described in Citigroup's 2006 Annual Report on Form 10-K.

The Citigroup Senior Risk Officer is responsible for:

•: establishing standards for the measurement and reporting of risk,
•: managing and compensating the senior independent risk managers at the business level,
•: approving business-level risk management policies, and
•: reviewing major risk exposures and concentrations across the organization.

The independent risk managers at the business level are responsible for establishing and implementing risk management policies and practices within their business, for overseeing the risk in their business, and for responding to the needs and issues of their business.

RISK CAPITAL

Risk capital is defined as the amount of capital required to absorb potential unexpected economic losses resulting from extremely severe events over a one-year time period.

•: "Economic losses" include losses that appear on the income statement and fair value adjustments to the financial statements, as well as any further declines in value not captured on the income statement.
•: "Unexpected losses" are the difference between potential extremely severe losses and Citigroup's expected (average) loss over a one-year time period.
•: "Extremely severe" is defined as potential loss at a 99.97% confidence level, based on the distribution of observed events and scenario analysis.

Risk capital is used in the calculation of return on risk capital (RORC) and return on invested capital (ROIC).

RORC, calculated as annualized income from continuing operations divided by average risk capital, compares business income with the capital required to absorb the risks. It is used to assess businesses' operating performance and to determine incremental allocation of capital for organic growth.

ROIC is calculated using income adjusted to exclude a net internal funding cost Citigroup levies on the goodwill and intangible assets of each business. This adjusted annualized income is divided by the sum of each business's average risk capital, goodwill and intangible assets (excluding mortgage servicing rights, which are captured in risk capital). ROIC thus compares business income with the total invested capital—risk capital, goodwill and intangible assets—used to generate that income. ROIC is used to assess returns on potential acquisitions and divestitures, and to compare long-term performance of businesses with differing proportions of organic and acquired growth.

The drivers of "economic losses" are risks, which can be broadly categorized as credit risk (including cross-border risk), market risk and operational risk:

•: Credit risk losses primarily result from a borrower's or counterparty's inability to meet its obligations.
•: Market risk losses arise from fluctuations in the market value of trading and non-trading positions, including changes in value resulting from fluctuations in rates.
•: Operational risk losses result from inadequate or failed internal processes, people, systems or from external events.

These risks are measured and aggregated within businesses and across Citigroup to facilitate the understanding of the Company's exposure to extreme downside events.

At March 31, 2007, December 31, 2006, and March 31, 2006, risk capital for Citigroup was composed of the following risk types:

*In billions of dollars*	Mar. 31, 2007			Dec. 31, 2006			Mar. 31, 2006
Credit risk	$	38.3		$	36.7		$	36.3
Market risk		29.1			21.5			17.4
Operational risk		7.9			8.0			8.1
Intersector diversification(1)		(6.3	)		(6.4	)		(5.7	)

Total Citigroup	$	69.0		$	59.8		$	56.1

Return on risk capital (quarterly)		31	%		35	%		41	%
Return on invested capital		17	%		17	%		20	%

(1): Reduction in risk represents diversification between sectors.

The increase in Citigroup's risk capital versus December 31, 2006 was primarily related to the 2007 first quarter methodology update for the implementation of SFAS 158, higher interest rate risk, the 2007 first quarter methodology update for market risk for proprietary investments, credit portfolio growth, and recent acquisitions and investments.

Average risk capital, return on risk capital and return on invested capital are provided for each segment and product and are disclosed on pages 14 - 44.

The increase in average risk capital compared to the first quarter of 2006 was primarily driven by increases in Global Consumer and Markets & Banking. Average risk capital of $31.7 billion in Global Consumer increased $3.9 billion, or 14%, driven mostly by higher interest rate risk and recent acquisitions and strategic investments. Average risk capital of $24.1 billion in Markets & Banking increased $3.6 billion, or 17%, driven mostly by portfolio growth, updated methodology for market risk for proprietary investments, higher interest rate risk, and the recent strategic investments.

CREDIT RISK MANAGEMENT PROCESS

Credit risk arises in many of the Company's business activities, including:

•: lending
•: sales and trading
•: derivatives
•: securities transactions
•: settlement
•: when the Company acts as an intermediary on behalf of its clients and other third parties.

DETAILS OF CREDIT LOSS EXPERIENCE

In millions of dollars		1st Qtr. 2007			4th Qtr. 2006			3rd Qtr. 2006			2nd Qtr. 2006			1st Qtr. 2006
Allowance for loan losses at beginning of period		$	8,940		$	8,979		$	9,144		$	9,505		$	9,782

Provision for loan losses
	Consumer	$	2,443		$	2,028		$	1,736		$	1,426		$	1,446
	Corporate		263			85			57			10			(50	)

		$	2,706		$	2,113		$	1,793		$	1,436		$	1,396

Gross credit losses
Consumer
	In U.S. offices	$	1,291		$	1,223		$	1,091		$	1,090		$	1,105
	In offices outside the U.S.		1,341			1,309			1,227			1,145			1,037
Corporate
	In U.S. offices		6			13			6			44			15
	In offices outside the U.S.		29			97			38			75			26

		$	2,667		$	2,642		$	2,362		$	2,354		$	2,183

Credit recoveries
Consumer
	In U.S. offices	$	214		$	165		$	153		$	183		$	190
	In offices outside the U.S.		286			307			350			298			319
Corporate
	In U.S. offices		18			2			5			12			2
	In offices outside the U.S.		40			26			48			65			72

		$	558		$	500		$	556		$	558		$	583

Net credit losses
	In U.S. offices	$	1,065		$	1,069		$	939		$	939		$	928
	In offices outside the U.S.		1,044			1,073			867			857			672

Total		$	2,109		$	2,142		$	1,806		$	1,796		$	1,600

Other—net(1)(2)(3)(4)(5)		$	(27	)	$	(10	)	$	(152	)	$	(1	)	$	(73	)

Allowance for loan losses at end of period		$	9,510		$	8,940		$	8,979		$	9,144		$	9,505

Allowance for unfunded lending commitments(6)		$	1,100		$	1,100		$	1,100		$	1,050		$	900

Total allowance for loans and unfunded lending commitments		$	10,610		$	10,040		$	10,079		$	10,194		$	10,405

Net consumer credit losses		$	2,132		$	2,060		$	1,815		$	1,754		$	1,633
As a percentage of average consumer loans			1.69	%		1.64	%		1.49	%		1.48	%		1.46	%

Net corporate credit losses/(recoveries)		$	(23	)	$	82		$	(9	)	$	42		$	(33	)
As a percentage of average corporate loans			NM			0.05	%		NM			—			NM

(1): The first quarter of 2007 includes reductions to the loan loss reserve of $97 million related to a balance sheet reclass to Loans Held for Sale in the U.S. Cards portfolio and the addition of $75 million related to the acquisition of Grupo Financiero Uno.
(2): The 2006 fourth quarter includes reductions to the loan loss reserve of $74 million related to securitizations.
(3): The 2006 third quarter includes reductions to the loan loss reserve of $140 million related to securitizations and portfolio sales.
(4): The 2006 second quarter includes reductions to the loan loss reserve of $125 million related to securitizations, offset by $84 million of additions related to the Credicard acquisition.
(5): The first quarter of 2006 includes reductions to the loan loss reserve of $90 million related to securitizations.
(6): Represents additional credit loss reserves for unfunded corporate lending commitments and letters of credit recorded within Other Liabilities on the Consolidated Balance Sheet.
NM: Not meaningful

CASH-BASIS, RENEGOTIATED, AND PAST DUE LOANS

In millions of dollars	Mar. 31 2007		Dec. 31, 2006		Sept. 30, 2006		June 30, 2006		Mar. 31, 2006
Corporate cash-basis loans
Collateral dependent (at lower of cost or collateral value)(1)	$	19	$	19	$	15	$	—	$	—
Other		481		516		677		799		821

Total	$	500	$	535	$	692	$	799	$	821

Corporate cash-basis loans
In U.S. offices	$	38	$	58	$	23	$	24	$	65
In offices outside the U.S.		462		477		669		775		756

Total	$	500	$	535	$	692	$	799	$	821

Renegotiated loans (includes Corporate and Commercial Business Loans)	$	26	$	22	$	23	$	23	$	30

Consumer loans on which accrual of interest had been suspended
In U.S. offices	$	2,501	$	2,490	$	2,231	$	1,985	$	2,088
In offices outside the U.S.		2,077		2,022		1,958		1,872		1,664

Total	$	4,578	$	4,512	$	4,189	$	3,857	$	3,752

Accruing loans 90 or more days delinquent(2)
In U.S. offices	$	2,374	$	2,260	$	2,576	$	2,403	$	2,531
In offices outside the U.S.		532		524		448		431		410

Total	$	2,906	$	2,784	$	3,024	$	2,834	$	2,941

(1): A cash-basis loan is defined as collateral dependent when repayment is expected to be provided solely by the liquidation of the underlying collateral and there are no other available and reliable sources of repayment, in which case the loans are written down to the lower of cost or collateral value.
(2): Substantially composed of consumer loans of which $2,074 million, $1,891 million, $1,897 million, $1,815 million, and $1,797 million, are government-guaranteed student loans and Federal Housing Authority mortgages at March 31, 2007, December 31, 2006, September 30, 2006, June 30, 2006, and March 31, 2006, respectively.

Other Real Estate Owned and Other Repossessed Assets

In millions of dollars	Mar. 31, 2007		Dec. 31, 2006		Sept. 30, 2006		June 30, 2006		Mar. 31, 2006
Other real estate owned(1)
Consumer	$	461	$	385	$	356	$	324	$	322
Corporate		348		316		193		171		144

Total other real estate owned	$	809	$	701	$	549	$	495	$	466

Other repossessed assets(2)	$	77	$	75	$	62	$	53	$	52

(1): Represents repossessed real estate, carried at lower of cost or fair value, less costs to sell.
(2): Primarily transportation equipment, carried at lower of cost or fair value, less costs to sell.

CONSUMER PORTFOLIO REVIEW

Citigroup's Consumer Loan portfolio is well diversified by both product and location.

In the Consumer portfolio, credit loss experience is often expressed in terms of annualized net credit losses as a percentage of average loans. Consumer loans are generally written off no later than a predetermined number of days past due on a contractual basis, or earlier in the event of bankruptcy.

U.S. Commercial Business includes loans and leases made principally to small- and middle-market businesses. These are placed on a non-accrual basis when it is determined that the payment of interest or principal is past due for 90 days or more, except when the loan is well secured and in the process of collection.

The following table summarizes delinquency and net credit loss experience in both the managed and on-balance sheet Consumer Loan portfolios. The managed loan portfolio includes held-for-sale and securitized credit card receivables, which affects only U.S. Cards from a product view and U.S. from a regional view. Although a managed basis presentation is not in conformity with GAAP, the Company believes managed credit statistics provide a representation of performance and key indicators of the credit card business that is consistent with the way management reviews operating performance and allocates resources. For example, the U.S. Cards business considers both on-balance sheet and securitized balances (together, its managed portfolio) when determining capital allocation and general management decisions and compensation. Furthermore, investors use information about the credit quality of the entire managed portfolio, as the results of both the on-balance sheet and securitized portfolios impact the overall performance of the U.S. Cards business. For a further discussion of managed-basis reporting, see Note 13 on page 98.

Consumer Loan Delinquency Amounts, Net Credit Losses, and Ratios

			Total Loans		90 Days or More Past Due(1)									Average Loans		Net Credit Losses(1)
In millions of dollars, except total and average loan amounts in billions Product View:			Mar. 31, 2007		Mar. 31, 2007			Dec. 31, 2006			Mar. 31, 2006			1st Qtr. 2007		1st Qtr. 2007			4th Qtr. 2006			1st Qtr. 2006
U.S.:
	U.S. Cards		$	35.9	$	587		$	718		$	958		$	38.9	$	439		$	439		$	446
		Ratio				1.63	%		1.61	%		2.39	%				4.58	%		4.30	%		4.27	%
	U.S. Retail Distribution			48.4		847			834			740			47.6		335			337			279
		Ratio				1.75	%		1.73	%		1.73	%				2.85	%		2.88	%		2.66	%
	U.S. Consumer Lending			218.6		3,026			2,870			2,411			216.6		286			258			176
		Ratio				1.38	%		1.36	%		1.25	%				0.53	%		0.49	%		0.38	%
	U.S. Commercial Business			37.6		195			149			151			36.6		19			23			14
		Ratio				0.52	%		0.41	%		0.44	%				0.21	%		0.25	%		0.17	%
International:
	International Cards			32.2		736			709			535			31.2		384			402			218
		Ratio				2.29	%		2.29	%		2.22	%				4.99	%		5.39	%		3.64	%
	International Consumer Finance			25.3		592			608			437			25.0		430			380			319
		Ratio				2.34	%		2.43	%		1.93	%				6.98	%		6.05	%		5.78	%
	International Retail Banking			71.3		630			667			736			69.8		238			221			184
		Ratio				0.88	%		0.97	%		1.21	%				1.38	%		1.29	%		1.21	%
	Private Bank(2)			44.6		10			21			12			43.6		—			—			(4	)
		Ratio				0.02	%		0.05	%		0.03	%				0.00	%		0.00	%		(0.04	)%
Other Consumer Loans				2.7		—			—			43			2.6		1			—			1

On-Balance Sheet in Loans(3)			$	516.6	$	6,623		$	6,576		$	6,023		$	511.9	$	2,132		$	2,060		$	1,633
		*Ratio*				1.28	%		1.29	%		1.31	%				1.69	%		1.64	%		1.46	%

Securitized receivables (all in U.S. Cards)			$	98.6	$	1,528		$	1,616		$	1,403		$	97.3	$	1,150		$	1,094		$	871
Credit card receivables held-for-sale				3.0		47			—			—			3.0		—			—			4

Managed Loans(4)			$	618.2	$	8,198		$	8,192		$	7,426		$	612.2	$	3,282		$	3,154		$	2,508
		*Ratio*				1.33	%		1.34	%		1.34	%				2.17	%		2.09	%		1.85	%

Regional View:
U.S.			$	371.5	$	4,663		$	4,584		$	4,312		$	370.2	$	1,080		$	1,058		$	916
	Ratio					1.26	%		1.24	%		1.27	%				1.18	%		1.16	%		1.11	%
Mexico				16.9		507			625			541			16.5		182			163			106
	Ratio					3.00	%		3.78	%		3.68	%				4.47	%		3.97	%		2.87	%
EMEA				45.7		582			574			487			44.4		317			303			250
	Ratio					1.27	%		1.32	%		1.32	%				2.89	%		2.84	%		2.77	%
Japan				10.9		227			235			170			11.0		313			273			223
	Ratio					2.08	%		2.08	%		1.48	%				11.57	%		9.43	%		7.83	%
Asia				63.7		432			439			473			62.7		164			186			136
	Ratio					0.68	%		0.71	%		0.87	%				1.06	%		1.22	%		1.01	%
Latin America				7.9		212			119			40			7.1		76			77			2
	Ratio					2.69	%		1.84	%		0.99	%				4.36	%		4.98	%		0.21	%

On-Balance Sheet in Loans(3)			$	516.6	$	6,623		$	6,576		$	6,023		$	511.9	$	2,132		$	2,060		$	1,633

	*Ratio*					1.28	%		1.29	%		1.31	%				1.69	%		1.64	%		1.46	%

Securitized receivables (all in U.S. Cards)			$	98.6	$	1,528		$	1,616		$	1,403		$	97.3	$	1,150		$	1,094		$	871
Credit card receivables held-for-sale				3.0		47			—			—			3.0		—			—			4

Managed Loans(4)			$	618.2	$	8,198		$	8,192		$	7,426		$	612.2	$	3,282		$	3,154		$	2,508
	*Ratio*					1.33	%		1.34	%		1.34	%				2.17	%		2.09	%		1.85	%

(1): The ratios of 90 days or more past due and net credit losses are calculated based on end-of-period and average loans, respectively, both net of unearned income.
(2): Private Bank results are reported as part of the Global Wealth Management segment.
(3): Total loans and total average loans exclude certain interest and fees on credit cards of approximately $2 billion and $2 billion, respectively, which are included in Consumer Loans on the Consolidated Balance Sheet.
(4): This table presents credit information on a held basis and shows the impact of securitizations to reconcile to a managed basis. Only U.S. Cards from a product view, and U.S from a regional view, are impacted. Managed-basis reporting is a non-GAAP measure. Held-basis reporting is the related GAAP measure. See a discussion of managed-basis reporting on page 51.

Consumer Loan Balances, Net of Unearned Income

	End of Period						Average
In billions of dollars	Mar. 31, 2007		Dec. 31, 2006		Mar. 31, 2006		1st Qtr. 2007		4th Qtr 2006		1st Qtr. 2006
On-balance sheet(1)	$	516.6	$	510.8	$	459.4	$	511.9	$	498.0	$	454.8
Securitized receivables (all in U.S. Cards)		98.6		99.5		95.9		97.3		99.1		94.7
Credit card receivables held-for-sale(2)		3.0		—		—		3.0		0.2		0.3

Total managed(3)	$	618.2	$	610.3	$	555.3	$	612.2	$	597.3	$	549.8

(1): Total loans and total average loans exclude certain interest and fees on credit cards of approximately $2 billion and $2 billion for the first quarter of 2007, approximately $2 billion and $2 billion for the fourth quarter of 2006, and approximately $3 billion and $4 billion for the first quarter of 2006, respectively, which are included in Consumer Loans on the Consolidated Balance Sheet.
(2): Included in Other Assets on the Consolidated Balance Sheet.
(3): This table presents loan information on a held basis and shows the impact of securitization to reconcile to a managed basis. Managed-basis reporting is a non-GAAP measure. Held-basis reporting is the related GAAP measure. See a discussion of managed-basis reporting on page 51.

Citigroup's total allowance for loans, leases and unfunded lending commitments of $10.610 billion is available to absorb probable credit losses inherent in the entire portfolio. For analytical purposes only, the portion of Citigroup's allowance for credit losses attributed to the Consumer portfolio was $6.338 billion at March 31, 2007, $6.006 billion at December 31, 2006 and $6.647 billion at March 31, 2006. The decrease in the allowance for credit losses from March 31, 2006 of $309 million included:

•: reserve releases, primarily related to a decline in bankruptcy filings due to the impact of the change in bankruptcy legislation on U.S. Cards in 2005, and stable credit conditions in the U.S. and internationally;
•: $339 million of reductions related to securitizations and sales of portfolios in the U.S. Cards business;
•: a $97 million balance sheet reclass to loans held for sale in the U.S. Cards business;

Offsetting these reductions in the allowance for credit losses was the impact of reserve builds of $856 million, primarily related to increased reserves to reflect: a change in estimate of loan losses inherent in the initial tenor portion of the Consumer Loan portfolio; increased delinquencies in second mortgages, and portfolio growth in the U.S. Consumer Lending mortgage portfolio. Additionally, market expansion in Mexico Cards, the integration of the Credicard portfolio in Brazil and increased reserves in Japan, primarily related to the change in the operating environment in the consumer finance business, and the passage on December 13, 2006, of changes to Japan's consumer lending laws, added to the increase. The acquisition of the CrediCard portfolio and the Grupo Financiero Uno business increased the allowance for credit losses by $84 million and $75 million, respectively in Latin America.

On-balance sheet consumer loans of $516.6 billion increased $57.2 billion, or 12%, from March 31, 2006, primarily driven by growth in mortgage and other real-estate-secured loans in the U.S. Consumer Lending, U.S. Commercial Business, and Private Bank businesses, as well as growth in U.S. Retail Distribution and all International businesses.

Net credit losses, delinquencies and the related ratios are affected by the credit performance of the portfolios, including bankruptcies, unemployment, global economic conditions, portfolio growth and seasonal factors, as well as macro-economic and regulatory policies.

CORPORATE CREDIT RISK

For corporate clients and investment banking activities across the organization, the credit process is grounded in a series of fundamental policies, including:

•: joint business and independent risk management responsibility for managing credit risks;
•: single center of control for each credit relationship that coordinates credit activities with that client;
•: portfolio limits to ensure diversification and maintain risk/capital alignment;
•: a minimum of two-authorized credit officer-signatures are required on extensions of credit—(one from a sponsoring credit officer in the business and one from a credit officer in independent credit risk management);
•: risk rating standards, applicable to every obligor and facility; and
•: consistent standards for credit origination documentation and remedial management.

Credit Exposure Arising from Derivatives and Foreign Exchange

Citigroup uses derivatives as both an end-user for asset/liability management and in its client businesses. In Markets & Banking, Citigroup enters into derivatives for trading purposes or to enable customers to transfer, modify or reduce their interest rate, foreign exchange and other market risks. In addition, Citigroup uses derivatives and other instruments, primarily interest rate and foreign exchange products, as an end-user to manage interest rate risk relating to specific groups of interest-sensitive assets and liabilities. Also, foreign exchange contracts are used to hedge non-U.S. dollar denominated debt, net capital exposures and foreign exchange transactions.

The Company's credit exposure on derivatives and foreign exchange contracts is primarily to professional counterparties in the financial sector, arising from transactions with banks, investment banks, governments and central banks, and other financial institutions.

For purposes of managing credit exposure on derivative and foreign exchange contracts, particularly when looking at exposure to a single counterparty, the Company measures and monitors credit exposure taking into account the current mark-to-market value of each contract plus a prudent estimate of its potential change in value over its life. This measurement of the potential future exposure for each credit facility is based on a stressed simulation of market rates and generally takes into account legally enforceable risk-mitigating agreements for each obligor such as netting and margining.

For asset/liability management hedges that are subject to SFAS 133, the hedging derivative must be highly effective in accomplishing the hedge objective of offsetting either changes in the fair value or cash flows of the hedged item for the risk being hedged. Any ineffectiveness present in the hedge relationship is recognized in current earnings. The assessment of effectiveness excludes the changes in the value of the hedged item that are unrelated to the risks being hedged. Similarly, the assessment of effectiveness may exclude changes in the fair value of a derivative related to time value, which, if excluded, is recognized in current earnings.

The following tables summarize by derivative type the notionals, receivables and payables held for trading and asset/liability management hedge purposes as of March 31, 2007 and December 31, 2006. A portion of the asset/liability management hedges are accounted for under SFAS 133, and in Note 15 on page 102.

CITIGROUP DERIVATIVES

Notionals(1)

		Trading Derivatives(2)				Asset/Liability Management Hedges(3)
In millions of dollars		March 31, 2007		December 31, 2006		March 31, 2007		December 31, 2006
Interest rate contracts
	Swaps	$	15,127,660	$	14,196,404	$	584,647	$	561,376
	Futures and forwards		2,115,956		1,824,205		132,102		75,374
	Written options		4,018,792		3,054,990		31,078		12,764
	Purchased options		3,986,488		2,953,122		62,645		35,420

Total interest rate contract notionals		$	25,248,896	$	22,028,721	$	810,472	$	684,934

Foreign exchange contracts
	Swaps	$	770,255	$	722,063	$	60,181	$	53,216
	Futures and forwards		2,271,735		2,068,310		41,955		42,675
	Written options		482,675		416,951		886		1,228
	Purchased options		458,963		404,859		761		1,246

Total foreign exchange contract notionals		$	3,983,628	$	3,612,183	$	103,783	$	98,365

Equity contracts
	Swaps	$	127,252	$	104,320	$	—	$	—
	Futures and forwards		26,921		36,362		—		—
	Written options		584,088		387,781		—		—
	Purchased options		541,841		355,891		—		—

Total equity contract notionals		$	1,280,102	$	884,354	$	—	$	—

Commodity and other contracts
	Swaps	$	41,146	$	35,611	$	—	$	—
	Futures and forwards		45,005		17,433		—		—
	Written options		15,407		11,991		—		—
	Purchased options		16,869		16,904		—		—

Total commodity and other contract notionals		$	118,427	$	81,939	$	—	$	—

Credit derivatives		$	2,467,859	$	1,944,980	$	—	$	—

Total derivative notionals		$	33,098,912	$	28,552,177	$	914,255	$	783,299

Mark-to-Market (MTM) Receivables/Payables

			Derivatives Receivables—MTM						Derivatives Payables—MTM
In millions of dollars			March 31, 2007			December 31, 2006			March 31, 2007			December 31, 2006
Trading Derivatives(2)
	Interest rate contracts		$	171,536		$	167,521		$	174,217		$	166,119
	Foreign exchange contracts			45,871			52,297			41,430			47,469
	Equity contracts			28,281			26,883			53,154			52,980
	Commodity and other contracts			5,216			5,387			5,462			5,776
	Credit derivative			20,078			14,069			20,621			15,081

		Total	$	270,982		$	266,157		$	294,884		$	287,425
		Less: Netting agreements, cash collateral and market value adjustments		(224,516	)		(216,616	)		(220,693	)		(212,621	)

		Net Receivables/Payables	$	46,466		$	49,541		$	74,191		$	74,804

Asset/Liability Management Hedges(3)
	Interest rate contracts		$	1,837		$	1,801		$	4,816		$	3,327
	Foreign exchange contracts			3,861			3,660			681			947

		Total	$	5,698		$	5,461		$	5,497		$	4,274

(1): Includes the notional amounts for long and short derivative positions.
(2): Trading Derivatives include proprietary positions, as well as hedging derivatives instruments that do not qualify for hedge accounting in accordance with SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities"(SFAS 133).
(3): Asset/Liability Management Hedges include only those end-user derivative instruments where the changes in market value are recorded to other assets or other liabilities.

GLOBAL CORPORATE PORTFOLIO REVIEW

Corporate loans are identified as impaired and placed on a non-accrual basis (cash-basis) when it is determined that the payment of interest or principal is doubtful or when interest or principal is past due for 90 days or more; the exception is when the loan is well secured and in the process of collection. Impaired corporate loans are written down to the extent that principal is judged to be uncollectible. Impaired collateral-dependent loans are written down to the lower of cost or collateral value, less disposal costs.

The following table summarizes corporate cash-basis loans and net credit losses:

In millions of dollars	Mar. 31, 2007			Dec. 31, 2006			Mar. 31, 2006
Corporate cash-basis loans
Securities and Banking	$	474		$	500		$	745
Transaction Services		26			35			76

Total corporate cash-basis loans(1)	$	500		$	535		$	821

Net credit losses (recoveries)
Securities and Banking	$	(28	)	$	70		$	(34	)
Transaction Services		5			6			1
Alternative Investments		1			—			—
Corporate/Other		(1	)		6			—

Total net credit losses (recoveries)	$	(23	)	$	82		$	(33	)

Corporate allowance for loan losses	$	3,172		$	2,934		$	2,858
Corporate allowance for credit losses on unfunded lending commitments(2)		1,100			1,100			900

Total corporate allowance for loans and unfunded lending commitments	$	4,272		$	4,034		$	3,758

As a percentage of total corporate loans(3)		1.82	%		1.76	%		2.00	%

(1): Excludes purchased distressed loans accounted for in accordance with SOP 03-3. The carrying value of these loans was $957 million at March 31, 2007, $949 million at December 31, 2006 and $1,217 million at March 31, 2006.
(2): Represents additional reserves recorded in Other Liabilities on the Consolidated Balance Sheet.
(3): Does not include the allowance for unfunded lending commitments.

Cash-basis loans on March 31, 2007 decreased $321 million as compared with March 31, 2006; $271 million of the decrease was in Securities and Banking and $50 million was in Transaction Services. Securities and Banking decreased primarily due to decreases in KorAm, Europe, Mexico and the Philippines.

Cash-basis loans decreased $35 million as compared to December 31, 2006 due to decreases of $26 million in Securities and Banking and $9 million in Transaction Services. Securities and Banking primarily reflected declining charge-offs in North America, Mexico and Poland.

Total corporate Other Real Estate Owned (OREO) was $348 million, $316 million and $144 million at March 31, 2007, December 31, 2006, and March 31, 2006, respectively. The $204 million increase from March 31, 2006 reflects net foreclosures in the U.S. real estate portfolio.

Total corporate loans outstanding at March 31, 2007 were $174 billion as compared to $166 billion and $143 billion at December 31, 2006 and March 31, 2006, respectively.

Total corporate net credit recovery of $23 million on March 31, 2007 decreased $10 million compared to March 31, 2006, primarily due to continued improvements in the overall credit environment. Total corporate net credit losses increased $105 million compared to the 2006 fourth quarter, primarily due to the absence of write-offs in the fourth quarter of 2006.

Citigroup's allowance for credit losses for loans, leases and lending commitments of $10.610 billion is available to absorb probable credit losses inherent in the entire portfolio. For analytical purposes only, the portion of Citigroup's allowance for credit losses attributed to the Corporate portfolio was $4.272 billion at March 31, 2007, compared to $3.758 billion at March 31, 2006 and $4.034 billion at December 31, 2006, respectively. The $514 million increase in the total allowance at March 31, 2007 from March 31, 2006 primarily reflects reserve builds related to unfunded lending commitments and increases in expected losses during the year. There was a $238 million increase in the total allowance at March 31, 2007 from December 31, 2006 primarily reflects an increase in the reserve for $300 million based on portfolio growth in Markets & Banking, which includes higher commitments to leveraged transactions and an increase in average loan tenor. Losses on corporate lending activities and the level of cash-basis loans can vary widely with respect to timing and amount, particularly within any narrowly defined business or loan type.

MARKET RISK MANAGEMENT PROCESS

Market risk encompasses liquidity risk and price risk, both of which arise in the normal course of business of a global financial intermediary. Liquidity risk is the risk that an entity may be unable to meet a financial commitment to a customer, creditor, or investor when due. Liquidity risk is discussed in the "Capital Resources and Liquidity" on page 68. Price risk is the earnings risk from changes in interest rates, foreign exchange rates, equity and commodity prices, and in their implied volatilities. Price risk arises in non-trading portfolios, as well as in trading portfolios.

Market risks are measured in accordance with established standards to ensure consistency across businesses and the ability to aggregate risk. Each business is required to establish, with approval from independent market risk management, a market risk limit framework, including risk measures and controls, that clearly defines approved risk profiles and is within the parameters of Citigroup's overall risk appetite.

In all cases, the businesses are ultimately responsible for the market risks they take and for remaining within their defined limits.

Non-Trading Portfolios

Interest Rate Risk

One of Citigroup's primary business functions is providing financial products that meet the needs of its customers. Loans and deposits are tailored to the customer's requirements with regard to tenor, index, and rate type. Net Interest Revenue (NIR) is the difference between the yield earned on the non-trading portfolio assets (including customer loans) and rate paid on the liabilities (including customer deposits or company borrowings). The NIR is affected by changes in the level of interest rates. For example:

•: At any given time, there may be an unequal amount of assets and liabilities, which are subject to market rates due to maturation or repricing. Whenever the amount of liabilities subject to repricing exceeds the amount of assets subject to repricing, a company is considered "liability sensitive." In this case, a company's NIR will deteriorate in a rising rate environment.
•: The assets and liabilities of a company may reprice at different speeds or mature at different times, subjecting both "liability sensitive" and "asset sensitive" companies to NIR sensitivity from changing interest rates. For example, a company may have a large amount of loans that are subject to repricing this period, but the majority of deposits are not scheduled for repricing until the following period. That company would suffer from NIR deterioration if interest rates were to fall.

NIR in the current period is the result of customer transactions and the related contractual rates originated in prior periods as well as new transactions in the current period; those prior period transactions will be impacted by changes in rates on floating rate assets and liabilities in the current period.

Due to the long-term nature of the portfolios, NIR will vary from quarter to quarter even assuming no change in the shape or level of the yield curve as the assets and liabilities reprice. These repricings are a function of implied forward interest rates, which represent the overall market's unbiased estimate of future interest rates and incorporate possible changes in the Federal Funds rate as well as the shape of the yield curve.

Interest Rate Risk Governance

The risks in Citigroup's non-traded portfolios are estimated using a common set of standards that define, measure, limit and report the market risk. Each business is required to establish, with approval from independent market risk management, a market risk limit framework that clearly defines approved risk profiles and is within the parameters of Citigroup's overall risk appetite. In all cases, the businesses are ultimately responsible for the market risks they take and for remaining within their defined limits. These limits are monitored by independent market risk, country and business Asset and Liability Committees (ALCOs) and the Global Finance and Asset and Liability Committee (FinALCO).

Interest Rate Risk Measurement

Citigroup's principal measure of risk to NIR is Interest Rate Exposure (IRE). IRE measures the change in expected NIR in each currency resulting solely from unanticipated changes in forward interest rates. Factors such as changes in volumes, spreads, margins and the impact of prior-period pricing decisions are not captured by IRE. IRE assumes that businesses make no additional changes in pricing or balances in response to the unanticipated rate changes.

IRE tests the impact on NIR resulting from unanticipated changes in forward interest rates. For example, if the current 90-day LIBOR rate is 3.00% and the one-year forward rate is 5.00% (i.e., the estimated 90-day LIBOR rate in one year), the +100bps IRE scenario measures the impact of the firm's NIR of a 100bps instantaneous change in the 90-day LIBOR, to 6% in one year).

The impact of changing prepayment rates on loan portfolios is incorporated into the results. For example, in the declining interest rate scenarios, it is assumed that mortgage portfolios prepay faster and income is reduced. In addition, in a rising interest rate scenario, portions of the deposit portfolio are assumed to experience rate increases that are less than the change in market interest rates.

Mitigation and Hedging of Risk

All financial institutions' financial performance is subject to some degree of risk due to changes in interest rates. In order to manage these risks effectively, Citigroup may modify pricing on new customer loans and deposits, enter into transactions with other institutions or enter into off-balance sheet derivative transactions that have the opposite risk exposures. Therefore, Citigroup regularly assesses the viability of strategies to reduce unacceptable risks to earnings and implements such strategies when the Company believes those actions are prudent. As information becomes available, Citigroup formulates strategies aimed at protecting earnings from the potential negative effects of changes in interest rates.

Citigroup employs additional measurements, including stress testing the impact of non-linear interest rate movements on the value of the balance sheet; the analysis of portfolio duration and volatility, particularly as they relate to mortgage

loans and mortgage-backed securities; and the potential impact of the change in the spread between different market indices.

The exposures in the following table represent the approximate annualized risk to NIR assuming an unanticipated parallel instantaneous 100bp change, as well as a more gradual 100bp (25bp per quarter) parallel change in rates as compared with the market forward interest rates in selected currencies.

	March 31, 2007						December 31, 2006						March 31, 2006
In millions of dollars	Increase			Decrease			Increase			Decrease			Increase			Decrease
U.S. dollar
Instantaneous change	$	(677	)	$	470		$	(728	)	$	627		$	(435	)	$	585
Gradual change	$	(335	)	$	348		$	(349	)	$	360		$	(266	)	$	271

Mexican peso
Instantaneous change	$	21		$	(21	)	$	42		$	(43	)	$	91		$	(92	)
Gradual change	$	21		$	(21	)	$	41		$	(41	)	$	63		$	(63	)

Euro
Instantaneous change	$	(123	)	$	123		$	(91	)	$	91		$	(56	)	$	56
Gradual change	$	(57	)	$	57		$	(38	)	$	38		$	(15	)	$	15

Japanese yen
Instantaneous change	$	(38	)		NM		$	(32	)		NM		$	(5	)		NM
Gradual change	$	(26	)		NM		$	(21	)		NM		$	5			NM

Pound sterling
Instantaneous change	$	(22	)	$	22		$	(41	)	$	41		$	(22	)	$	21
Gradual change	$	(11	)	$	11		$	(21	)	$	21		$	5		$	(5	)

NM: Not meaningful. A 100 basis point decrease in interest rates would imply negative rates for the Japanese yen yield curve.

The changes in the U.S. dollar interest rate exposures from December 31, 2006 primarily reflects movements in customer-related asset and liability mix, as well as Citigroup's view of prevailing interest rates.

The following table shows the risk to NIR from six different changes in the implied forward rates. Each scenario assumes that the rate change will occur on a gradual basis every three months over the course of one year.

	Scenario 1			Scenario 2			Scenario 3			Scenario 4			Scenario 5			Scenario 6
Overnight rate change (bp)		—			100			200			(200	)		(100	)		—
10-year rate change (bp)		(100	)		—			100			(100	)		—			100

Impact to net interest revenue	$	29		$	(380	)	$	(851	)	$	649		$	383		$	(252	)

(in millions of dollars)

Trading Portfolios

Price risk in trading portfolios is monitored using a series of measures, including:

•: factor sensitivities;
•: Value-at-Risk (VAR); and
•: stress testing.

Factor sensitivities are expressed as the change in the value of a position for a defined change in a market risk factor, such as a change in the value of a Treasury bill for a one basis point change in interest rates. Citigroup's independent market risk management ensures that factor sensitivities are calculated, monitored and, in most cases, limited, for all relevant risks taken in a trading portfolio.

VAR estimates the potential decline in the value of a position or a portfolio under normal market conditions. The VAR method incorporates the factor sensitivities of the trading portfolio with the volatilities and correlations of those factors and is expressed as the risk to the Company over a one-day holding period, at a 99% confidence level. Citigroup's VAR is based on the volatilities of and correlations between a multitude of market risk factors as well as factors that track the specific issuer risk in debt and equity securities.

Stress testing is performed on trading portfolios on a regular basis to estimate the impact of extreme market movements. It is performed on both individual trading portfolios, as well as on aggregations of portfolios and businesses. Independent market risk management, in conjunction with the businesses, develops stress scenarios, reviews the output of periodic stress testing exercises, and uses the information to make judgments as to the ongoing appropriateness of exposure levels and limits.

Each trading portfolio has its own market risk limit framework, encompassing these measures and other controls, including permitted product lists and a new product approval process for complex products.

Risk capital for market risk in trading portfolios is based on an annualized VAR figure.

Total revenues of the trading business consist of:

•: Customer revenue, which includes spreads from customer flow and positions taken to facilitate customer orders;
•: Proprietary trading activities in both cash and derivative transactions; and
•: Net interest revenue.

All trading positions are marked-to-market, with the result reflected in earnings.

Citigroup periodically performs extensive back-testing of many hypothetical test portfolios as one check of the accuracy of its VAR. Back-testing is the process in which the daily VAR of a portfolio is compared to the actual daily change in the market value of its transactions. Back-testing is conducted to confirm that the daily market value losses in excess of 99% confidence level occur, on average, only 1% of the time. The VAR calculation for the hypothetical test portfolios, with different degrees of risk concentration, meets this statistical criteria.

The level of price risk exposure at any given point in time depends on the market environment and expectations of future price and market movements, and will vary from period to period.

For Citigroup's major trading centers, the aggregate pretax VAR in the trading portfolios was $122 million, $106 million, and $106 million at March 31, 2007, December 31, 2006, and March 31, 2006, respectively. Daily exposures averaged $121 million during the first quarter of 2007 and ranged from $100 million to $140 million.

The following table summarizes VAR to Citigroup in the trading portfolios at March 31, 2007, December 31, 2006, and March 31, 2006, including the Total VAR, the specific risk only component of VAR, and Total—General market factors only, along with the quarterly averages:

In million of dollars	March 31, 2007			First Quarter 2007 Average			December 31, 2006			Fourth Quarter 2006 Average			March 31, 2006			First Quarter 2006 Average
Interest rate	$	99		$	95		$	81		$	79		$	95		$	86
Foreign exchange		29			28			27			30			29			23
Equity		77			70			62			51			43			48
Commodity		27			28			18			15			15			12
Covariance adjustment		(110	)		(100	)		(82	)		(79	)		(76	)		(67	)

Total — All market risk factors, including general and specific risk	$	122		$	121		$	106		$	96		$	106		$	102

Specific risk only component	$	5		$	12		$	8		$	12		$	10		$	11

Total — General market factors only	$	117		$	109		$	98		$	84		$	96		$	91

The specific risk only component represents the level of equity and debt issuer-specific risk embedded in VAR. Citigroup's specific risk model conforms to the 4x-multiplier treatment approved by the Federal Reserve and is subject to extensive annual hypothetical back-testing.

The table below provides the range of VAR in each type of trading portfolio that was experienced during the quarters ended:

	March 31, 2007				December 31, 2006				March 31, 2006
In millions of dollars	Low		High		Low		High		Low		High
Interest rate	$	71	$	125	$	64	$	98	$	69	$	107
Foreign exchange		21		35		23		45		16		34
Equity		55		85		41		65		42		58
Commodity		17		34		11		20		5		18

OPERATIONAL RISK MANAGEMENT PROCESS

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people or systems, or from external events. It includes the reputation and franchise risk associated with business practices or market conduct that the Company undertakes. Operational risk is inherent in Citigroup's global business activities and, as with other risk types, is managed through an overall framework with checks and balances that include:

•: Recognized ownership of the risk by the businesses;
•: Oversight by independent risk management; and
•: Independent review by Audit and Risk Review (ARR).

Framework

Citigroup's approach to operational risk is defined in the Citigroup Risk and Control Self-Assessment (RCSA)/ Operational Risk Policy.

The objective of the Policy is to establish a consistent, value-added framework for assessing and communicating operational risk and the overall effectiveness of the internal control environment across Citigroup. Each major business segment must implement an operational risk process consistent with the requirements of this Policy. The process for operational risk includes the following steps:

•: Identify and assess Key Operational Risks;
•: Establish Key Risk Indicators; and
•: Produce a comprehensive operational risk report.

The Operational Risk standards facilitate the effective communication of operational risk both within and across businesses. Information about the businesses' operational risk, historical losses, and the control environment is reported by each major business segment and functional area, and summarized for Senior Management and the Citigroup Board of Directors.

The RCSA standards establish a formal governance structure to provide direction, oversight, and monitoring of Citigroup's RCSA programs. The RCSA standards for risk and control assessment are applicable to all businesses and staff functions. They establish RCSA as the process whereby important risks inherent in a business' activities are identified and the effectiveness of the key controls over those risks are evaluated and monitored. RCSA processes facilitate Citigroup's adherence to regulatory requirements, including Sarbanes-Oxley, FDICIA, the International Convergence of Capital Measurement and Capital Standards (Basel II), and other corporate initiatives, including Operational Risk Management and alignment of capital assessments with risk management objectives. The entire process is subject to audit by Citigroup's ARR, and the results of RCSA are included in periodic management reporting, including reporting to Senior Management and the Audit and Risk Management Committee.

Measurement and Basel II

To support advanced capital modeling and management, the businesses are required to capture relevant operational risk capital information. An enhanced version of the risk capital model for operational risk has been developed and implemented across the major business segments as a step toward readiness for Basel II capital calculations. The risk capital calculation is designed to qualify as an "Advanced Measurement Approach" (AMA) under Basel II. It uses a combination of internal and external loss data to support statistical modeling of capital requirement estimates, which are then adjusted to reflect qualitative data regarding the operational risk and control environment.

Information Security and Continuity of Business

Citigroup continues to enhance a strategic framework for Information Security technology initiatives, and the Company is implementing enhancements to various Information Security programs across its businesses covering Information Security Risk Management, Security Incident Response and Electronic Transportable Media. The Company continues to implement tools to increase the effectiveness of its data protection and entitlement management programs. Additional monthly Information Security metrics were established to better assist the Information Technology Risk Officer in managing enterprise-wide risk. The Information Security Program complies with the Gramm-Leach-Bliley Act and other regulatory guidance.

The Corporate Office of Business Continuity, with the support of Senior Management, continues to coordinate global preparedness and mitigate business continuity risks by reviewing and testing recovery procedures.

COUNTRY AND CROSS-BORDER RISK MANAGEMENT PROCESS

Country Risk

Country risk is the risk that an event in a foreign country will impair the value of Citigroup assets or will adversely affect the ability of obligors within that country to honor their obligations to Citigroup. Country risk events may include sovereign defaults, banking or currency crises, social instability, and changes in governmental policies (for example, expropriation, nationalization, confiscation of assets and other changes in legislation relating to international ownership). Country risk includes local franchise risk, credit risk, market risk, operational risk, and cross-border risk.

The Country risk management framework at Citigroup includes a number of tools and management processes designed to facilitate the ongoing analysis of individual countries and their risks. These include country risk rating models, scenario planning and stress testing, internal watch lists, and the Country Risk Committee process.

The Citigroup Country Risk Committee is the senior forum to evaluate the Company's total business footprint within a specific country franchise with emphasis on responses to current potential country risk events. The Committee is chaired by the Head of Global Country Risk Management and includes as its members senior risk management officers, senior regional business heads, and senior product heads. The Committee regularly reviews all risk exposures within a country, makes recommendations as to actions, and follows up to ensure appropriate accountability.

Cross-Border Risk

Cross-border risk is the risk that actions taken by a non-U.S. government may prevent the conversion of local currency into non-local currency and/or the transfer of funds outside of the country, thereby impacting the ability of the Company and its customers to transact business across borders. Examples of cross-border risk include actions taken by foreign governments such as exchange controls, debt moratoria, or restrictions on the remittance of funds. These actions might restrict the transfer of funds or the ability of the Company to obtain payment from customers on their contractual obligations.

Management oversight of cross-border risk is performed through a formal review process that includes annual setting of cross-border limits and/or exposures, monitoring of economic conditions globally, and the establishment of internal cross-border risk management policies.

Under Federal Financial Institutions Examination Council (FFIEC) regulatory guidelines, total reported cross-border outstandings include cross-border claims on third parties, as well as investments in and funding of local franchises. Cross-border claims on third parties (trade, short-term, and medium- and long-term claims) include cross-border loans, securities, deposits with banks, investments in affiliates, and other monetary assets, as well as net revaluation gains on foreign exchange and derivative products.

Cross-border outstandings are reported based on the country of the obligor or guarantor. Outstandings backed by cash collateral are assigned to the country in which the collateral is held. For securities received as collateral, cross-border outstandings are reported in the domicile of the issuer of the securities. Cross-border resale agreements are presented based on the domicile of the counterparty in accordance with FFIEC guidelines.

Investments in and funding of local franchises represent the excess of local country assets over local country liabilities. Local country assets are claims on local residents recorded by branches and majority-owned subsidiaries of Citigroup domiciled in the country, adjusted for externally guaranteed claims and certain collateral. Local country liabilities are obligations of non-U.S. branches and majority-owned subsidiaries of Citigroup for which no cross-border guarantee has been issued by another Citigroup office.

The table below shows all countries where total FFIEC cross-border outstandings exceed 0.75% of total Citigroup assets:

	March 31, 2007																December 31, 2006
	Cross-Border Claims on Third Parties
	Cross-Border Claims on Third Parties										Investments in and Funding of Local Franchises		Total Cross- Border Out- standings				Total Cross- Border Out- standings
	Banks		Public		Private		Total		Trading and Short- Term Claims(1)		Investments in and Funding of Local Franchises		Total Cross- Border Out- standings		Commit- ments(2)		Total Cross- Border Out- standings		Commit- ments
Germany	$	19.3	$	11.5	$	8.8	$	39.6	$	35.8	$	2.5	$	42.1	$	46.8	$	38.6	$	43.6
India		1.0		0.1		8.6		9.7		7.3		17.8		27.5		8.3		24.8		0.7
Netherlands		9.9		3.2		12.7		25.8		22.9		—		25.8		13.6		20.1		10.5
France		7.6		5.6		12.5		25.7		23.3		—		25.7		77.1		19.8		60.8
United Kingdom		6.2		0.1		14.1		20.4		13.9		—		20.4		219.9		18.4		192.8
Spain		3.4		6.5		6.6		16.5		15.1		3.8		20.3		6.6		19.7		6.8
South Korea		0.9		1.2		3.7		5.8		5.8		14.3		20.1		10.1		19.7		11.4
Italy		2.3		9.5		4.0		15.8		15.3		0.7		16.5		4.7		18.6		4.0

(1): Included in total cross-border claims on third parties.
(2): Commitments (not included in total cross-border outstandings) include legally binding cross-border letters of credit and other commitments and contingencies as defined by the FFIEC. Effective March 31, 2006 the FFIEC revised the definition of commitments to include commitments to local residents that will be funded with local currency local liabilities.

INTEREST REVENUE/EXPENSE AND YIELDS

In millions of dollars		1st Qtr. 2007			4th Qtr. 2006(1)			1st Qtr. 2006			% Change 1Q07 vs. 1Q06
Interest Revenue(2)		$	28,132		$	26,257		$	21,873		29	%
Interest Expense			17,562			16,218			12,107		45

Net Interest Revenue(2)		$	10,570		$	10,039		$	9,766		8	%

Interest Revenue—Average Rate			6.55	%		6.42	%		6.38	%	17 bps
Interest Expense—Average Rate			4.50	%		4.39	%		3.94	%	56 bps
Net Interest Margin (NIM)			2.46	%		2.45	%		2.85	%	(39) bps

Interest Rate Benchmarks:
Federal Funds Rate—End of Period			5.25	%		5.25	%		4.75	%	50 bps

2 Year U.S. Treasury Note—Average Rate			4.76	%		4.74	%		4.60	%	16 bps
10 Year U.S. Treasury Note—Average Rate			4.68	%		4.63	%		4.57	%	11 bps

	10 Year vs. 2 Year Spread		(8) bps			(11) bps			(3) bps

(1): The 2006 fourth quarter includes a ($666) million reduction of interest revenue related to the change in consumer lending laws in Japan. This impacted the average rate on average interest-earning assets by 16 basis points and the net interest margin by 17 basis points.
(2): Excludes taxable equivalent adjustment (based on the U.S. Federal statutory tax rate of 35%) of $15 million, $30 million, and $29 million for the first quarter of 2007, the fourth quarter of 2006, and the first quarter of 2006, respectively.

A significant portion of the Company's business activities is based upon gathering deposits and borrowing money and then lending or investing those funds, including market-making activities in tradable securities. Net interest margin is calculated by dividing gross interest revenue less gross interest expense by average interest earning assets.

During 2006 and into 2007, pressure on net interest margin continued, driven by several factors. Interest expense increased due to both a rise in short-term interest rates and funding actions the Company has taken to lengthen its debt maturity profile.

The average rate on the Company's assets increased, but by less than the increase in average rates on borrowed funds or deposits. The average rate on assets reflected a highly competitive loan pricing environment, as well as a shift in the Company's loan portfolio from higher-yielding credit card receivables to assets that carry lower yields, such as mortgages and home equity loans.

AVERAGE BALANCES AND INTEREST RATES—ASSETS(1) (2) (3) (4)

		Average Volume						Interest Revenue						% Average Rate
In millions of dollars		1st Qtr. 2007		4th Qtr. 2006		1st Qtr. 2006		1st Qtr. 2007		4th Qtr. 2006		1st Qtr. 2006		1st Qtr. 2007		4th Qtr. 2006		1st Qtr. 2006
Assets
Deposits with banks(5)		$	45,306	$	40,598	$	34,851	$	709	$	693	$	489	6.35	%	6.77	%	5.69	%

Federal funds sold and securities borrowed or purchased under agreements to resell(6)
In U.S. offices		$	184,069	$	175,679	$	159,327	$	2,879	$	2,735	$	2,355	6.34	%	6.18	%	5.99	%
In offices outside the U.S.(5)			109,226		90,138		81,709		1,410		1,149		850	5.24		5.06		4.22

Total		$	293,295	$	265,817	$	241,036	$	4,289	$	3,884	$	3,205	5.93	%	5.80	%	5.39	%

Trading account assets(7) (8)
In U.S. offices		$	236,977	$	213,644	$	176,782	$	2,822	$	2,518	$	1,886	4.83	%	4.68	%	4.33	%
In offices outside the U.S.(5)			133,274		113,730		88,967		1,108		850		814	3.37		2.97		3.71

Total		$	370,251	$	327,374	$	265,749	$	3,930	$	3,368	$	2,700	4.30	%	4.08	%	4.12	%

Investments(1)
In U.S. offices
	Taxable	$	160,372	$	148,601	$	84,938	$	2,000	$	1,965	$	784	5.06	%	5.25	%	3.74	%
	Exempt from U.S. income tax		16,810		14,229		14,108		190		173		153	4.58		4.82		4.40
In offices outside the U.S.(5)			107,079		103,993		92,431		1,350		1,344		1,119	5.11		5.13		4.91

Total		$	284,261	$	266,823	$	191,477	$	3,540	$	3,482	$	2,056	5.05	%	5.18	%	4.35	%

Loans (net of unearned income)(9)
Consumer loans
In U.S. offices		$	362,860	$	353,174	$	327,026	$	7,458	$	7,475	$	6,662	8.34	%	8.40	%	8.26	%
In offices outside the U.S.(5)			151,523		147,304		131,365		4,033		3,379		3,690	10.79		9.10		11.39

Total consumer loans		$	514,383	$	500,478	$	458,391	$	11,491	$	10,854	$	10,352	9.06	%	8.60	%	9.16	%

Corporate loans
In U.S. offices		$	28,685	$	30,928	$	27,181	$	538	$	542	$	431	7.61	%	6.95	%	6.43	%
In offices outside the U.S.(5)			136,103		132,729		111,961		2,906		2,775		2,035	8.66		8.29		7.37

Total corporate loans		$	164,788	$	163,657	$	139,142	$	3,444	$	3,317	$	2,466	8.48	%	8.04	%	7.19	%

Total loans		$	679,171	$	664,135	$	597,533	$	14,935	$	14,171	$	12,818	8.92	%	8.47	%	8.70	%

Other interest-earning assets		$	68,379	$	58,881	$	59,208	$	729	$	659	$	605	4.32	%	4.44	%	4.14	%

Total interest-earning assets		$	1,740,663	$	1,623,628	$	1,389,854	$	28,132	$	26,257	$	21,873	6.55	%	6.42	%	6.38	%

Non-interest-earning assets(7)			204,255		193,135		182,280
Total assets from discontinued operations			—		—		—

Total assets		$	1,944,918	$	1,816,763	$	1,572,134

(1): Interest revenue excludes the taxable equivalent adjustments (based on the U.S. federal statutory tax rate of 35%) of $15 million, $30 million, and $29 million for the first quarter of 2007, the fourth quarter of 2006, and the first quarter of 2006, respectively.
(2): Interest rates and amounts include the effects of risk management activities associated with the respective asset and liability categories. See Note 15 on page 102.
(3): Monthly or quarterly averages have been used by certain subsidiaries where daily averages are unavailable.
(4): Detailed average volume, interest revenue and interest expense exclude discontinued operations. See Note 2 on page 87.
(5): Average rates reflect prevailing local interest rates, including inflationary effects and monetary correction in certain countries.
(6): Average volumes of securities borrowed or purchased under agreements to resell are reported net pursuant to FIN 41 and interest revenue excludes the impact of FIN 41.
(7): The fair value carrying amounts of derivative and foreign exchange contracts are reported in non-interest-earning assets and other non-interest bearing liabilities.
(8): Interest expense on trading account liabilities of Markets & Banking is reported as a reduction of interest revenue. Interest revenue and interest expense on cash collateral positions are reported in trading account assets and trading account liabilities, respectively.
(9): Includes cash-basis loans.

Reclassified to conform to the current period's presentation.

AVERAGE BALANCES AND INTEREST RATES—LIABILITIES AND EQUITY,
AND NET INTEREST REVENUE(1) (2) (3) (4)

		Average Volume						Interest Expense						% Average Rate
In millions of dollars		1st Qtr. 2007		4th Qtr. 2006		1st Qtr. 2006		1st Qtr. 2007		4th Qtr. 2006		1st Qtr. 2006		1st Qtr. 2007		4th Qtr. 2006		1st Qtr. 2006
Liabilities
Deposits
In U. S. offices
	Savings deposits(5)	$	145,259	$	138,332	$	132,268	$	1,170	$	1,094	$	868	3.27	%	3.14	%	2.66	%
Other time deposits			54,946		55,374		42,410		807		715		499	5.96		5.12		4.77
In offices outside the U.S.(6)			448,074		433,273		370,421		4,581		4,368		3,138	4.15		4.00		3.44

Total		$	648,279	$	626,979	$	545,099	$	6,558	$	6,177	$	4,505	4.10	%	3.91	%	3.35	%

Federal funds purchased and securities loaned or sold under agreements to repurchase(7)
In U.S. offices		$	237,732	$	218,357	$	185,147	$	3,541	$	3,234	$	2,676	6.04	%	5.88	%	5.86	%
In offices outside the U.S.(6)			128,641		105,222		88,086		1,942		1,600		1,223	6.12		6.03		5.63

Total		$	366,373	$	323,579	$	273,233	$	5,483	$	4,834	$	3,899	6.07	%	5.93	%	5.79	%

Trading account liabilities(8) (9)
In U.S. offices		$	42,319	$	39,557	$	35,270	$	235	$	229	$	192	2.25	%	2.30	%	2.21	%
In offices outside the U.S. (6)			45,340		39,716		36,485		72		65		51	0.64		0.65		0.57

Total		$	87,659	$	79,273	$	71,755	$	307	$	294	$	243	1.42	%	1.47	%	1.37	%