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, 2008
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 (Address of principal executive offices)		10043 (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, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ý

Accelerated filer o

Non-accelerated filer o
(Do not check if a smaller reporting company)

Smaller reporting company 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, 2008: 5,249,833,103

Available on the Web at www.citigroup.com

Citigroup Inc.

TABLE OF CONTENTS

Part I—Financial Information

		Page No.
Item 1.	Financial Statements:
	Consolidated Statement of Income (Unaudited)—Three Months Ended March 31, 2008 and 2007	60
	Consolidated Balance Sheet—March 31, 2008 (Unaudited) and December 31, 2007	61
	Consolidated Statement of Changes in Stockholders' Equity (Unaudited)—Three Months Ended March 31, 2008 and 2007	62
	Consolidated Statement of Cash Flows (Unaudited)—Three Months Ended March 31, 2008 and 2007	63
	Consolidated Balance Sheet—Citibank, N.A. and Subsidiaries March 31, 2008 (Unaudited) and December 31, 2007	64
	Notes to Consolidated Financial Statements (Unaudited)	65
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	5 - 58
	Summary of Selected Financial Data	4
	First Quarter of 2008 Management Summary	5
	Events in 2008	6
	Segment, Product and Regional Net Income and Net Revenues	8 - 11
	Managing Global Risk	20
	Interest Revenue/Expense and Yields	33
	Capital Resources and Liquidity	38
	Off-Balance Sheet Arrangements	44
	Forward-Looking Statements	58
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26 - 31
		91 - 94
Item 4.	Controls and Procedures	58
Part II—Other Information
Item 1.	Legal Proceedings	119
Item 1A.	Risk Factors	121
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	121
Item 4.	Submission of Matters to a Vote of Security Holders	122
Item 6.	Exhibits	123
Signatures		124
Exhibit Index		125

THE COMPANY

Citigroup Inc. (Citigroup and, together with its subsidiaries, the Company) is a global diversified financial services holding company whose 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 2007 Annual Report on Form 10-K. Additional financial, statistical, and business-related information, as well as business and segment trends, is included in a Financial Supplement that was filed as Exhibit 99.2 to the Company's Current Report on Form 8-K, filed with the Securities and Exchange Commission (SEC) on Apri1 18, 2008.

The principal executive offices of the Company are located at 399 Park Avenue, New York, New York 10043, telephone number 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 "All 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 was managed along the following segment and product lines through the first quarter of 2008:

The following are the six regions in which Citigroup operates. The regional results are fully reflected in the product results.

(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		2008			2007			% Change
Net interest revenue		$	13,473		$	10,612		27	%
Non-interest revenue			(254	)		14,847		NM

Revenues, net of interest expense		$	13,219		$	25,459		(48	)%
Operating expenses			16,216			15,571		4
Provisions for credit losses and for benefits and claims			6,026			2,967		NM

Income (loss) before taxes and minority interest		$	(9,023	)	$	6,921		NM
Income taxes (benefits)			(3,891	)		1,862		NM
Minority interest, net of taxes			(21	)		47		NM

Net Income (loss)		$	(5,111	)	$	5,012		NM

Earnings per share
	Basic	$	(1.02	)	$	1.02		NM
	Diluted(1)		(1.02	)		1.01		NM
Dividends declared per common share			0.32			0.54		(41	)%

At March 31:
Total assets		$	2,199,848		$	2,020,966		9	%
Total deposits			831,208			738,521		13
Long-term debt			424,959			310,768		37
Mandatorily redeemable securities of subsidiary trusts			23,959			9,440		NM
Common stockholders' equity			108,835			121,083		(10	)
Total stockholders' equity			128,219			122,083		5

Ratios:
Return on common stockholders' equity(2)			(18.6	)%		17.1	%

Tier 1 Capital			7.74	%		8.26	%
Total Capital			11.22	%		11.48
Leverage(3)			4.39	%		4.84

Common Stockholders' equity to assets			4.95	%		5.99	%
Dividend payout ratio(4)			N/A			53.5
Ratio of earnings to fixed charges and preferred stock dividends			0.45x			1.39x

(1): Due to the net loss in the first quarter of 2008, basic shares were used to calculate diluted earnings per share. Adding diluted securities to the denominator would result in anti-dilution.
(2): The return on average common stockholders' equity is calculated using net income (loss) minus preferred stock dividends.
(3): Tier 1 Capital divided by adjusted average assets.
(4): Dividends declared per common share as a percentage of net income per diluted share. For the first quarter of 2008, the dividend payout ratio was not calculable due to the net loss.
NM: Not meaningful

Certain statements in this Form 10-Q, including, but not limited to, statements made in "Management's Discussion and Analysis," are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from those included in these statements due to a variety of factors including, but not limited to, those described in Citigroup's 2007 Annual Report on Form 10-K under "Risk Factors" beginning on page 38.

MANAGEMENT'S DISCUSSION AND ANALYSIS

FIRST QUARTER OF 2008 MANAGEMENT SUMMARY

Citigroup reported a $5.1 billion net loss ($1.02 per share) for the first quarter of 2008. The first quarter results were driven by two main factors: write-downs and losses related to the continued disruption in the fixed income markets and higher U.S. consumer credit costs. Results also include a $661 million pretax gain on the sale of Redecard shares and a $633 million increase to pretax earnings for Visa-related items.

Revenues were $13.2 billion, down 48% from a year ago, primarily as a result of a $13.4 billion decrease in CMB revenues, including $6.0 billion in write-downs and credit costs on subprime-related direct exposures, write-downs of $3.1 billion (net of underwriting fees) on funded and unfunded highly leveraged financing commitments, a downward credit value adjustment of $1.5 billion related to exposure to monoline insurers, and write-downs of $1.5 billion on auction rate securities inventory and $1.0 billion on Alt-A mortgage securities.

International Consumer revenues were up 33% and International Global Wealth Management (GWM) revenues more than doubled, reflecting double-digit organic growth and results from Nikko Cordial. U.S. Consumer revenues were up 3% from the prior year, while Alternative Investments recorded negative revenues of $358 million. Transaction Services had another record quarter, with revenues up 42%.

Customer volume growth was strong, with average loans up 17%, average deposits up 16%, and average interest-earning assets up 10%. International Cards purchase sales were up 41%, while U.S. Cards sales were up 4%. In GWM, client assets under fee-based management were up 15%.

Net interest revenue increased 27% from last year, reflecting volume increases across most products. Net interest margin (NIM) in the first quarter of 2008 was 2.83%, up 36 basis points from the first quarter of 2007, reflecting significantly lower cost of funding, partially offset by a decrease in asset yields related to the decrease in the fed funds rate. (See discussion of NIM on page 33).

Operating expenses increased 4% from the first quarter of 2007 (foreign exchange translation accounted for 3%). The major components of the change are $622 million in repositioning charges related to our re-engineering plan, a $250 million reserve related to an offer to facilitate GWM clients' liquidation from a specific Citi-managed fund, a $202 million write-down on the multi-strategy hedge fund intangible asset related to Old Lane and the impact of acquisitions. Partially offsetting these items were the $166 million Visa-related litigation reserve release and a $282 million benefit resulting from a legal vehicle restructuring in our Mexico business. The first quarter of 2007 included a $1.4 billion restructuring charge related to our Structural Expense Initiatives review. Expenses were down 2% from the fourth quarter of 2007.

During the first quarter of 2008, the Company recorded a net build of $1.9 billion to its credit reserves. The build consisted of $1.8 billion in Global Consumer ($1.4 billion in U.S. Consumer and $424 million in International Consumer) and $148 million in Markets & Banking. The Global Consumer loss rate was 2.50%, an 81 basis-point increase from the first quarter of 2007. Corporate cash-basis loans increased $1.5 billion from year-ago levels.

The effective tax rate (benefit) of (43)% in the first quarter of 2008 primarily resulted from the pretax losses in the Company's S&B business taxed in the U.S. (the U.S. is a higher tax jurisdiction). In addition, the tax benefits of permanent differences, including the tax benefit for not providing U.S. income taxes on the earnings of certain foreign subsidiaries that are indefinitely invested, favorably affected the Company's effective tax rate.

Our stockholders' equity and trust preferred securities were $152.2 billion at March 31, 2008, reflecting preferred stock issuances of $19.4 billion during the quarter. We distributed $1.7 billion in common dividends to shareholders during the quarter. Citigroup maintained its "well-capitalized" position with a Tier 1 Capital Ratio of 7.74% at March 31, 2008.

We raised an additional $6.0 billion of capital through a preferred stock issuance on April 28, 2008 and sold approximately $4.9 billion of common stock (scheduled to close on May 5, 2008), which includes the over-allotment option that was exercised on May 1, 2008. On a pro forma basis, taking into account the issuances of this preferred and common stock, the Company's March 31, 2008 Tier 1 Capital ratio would have been approximately 8.7%.

On March 31, 2008, we announced a comprehensive reorganization of Citigroup's organizational structure to achieve greater client focus and connectivity, global product excellence, and clear accountability. The new organizational structure will allow us to focus resources towards growth in emerging and developed markets and improve efficiencies throughout the Company.

EVENTS IN 2008

Write-Downs on Subprime-Related Direct Exposures

During the first quarter of 2008, the Company's S&B business recorded unrealized losses of $6.0 billion pretax, net of hedges, on its subprime-related direct exposures.

The Company's remaining $29.1 billion in U.S. subprime net direct exposure in S&B at March 31, 2008 consisted of (a) approximately $22.7 billion of net exposures to the super senior tranches of collateralized debt obligations, which are collateralized by asset-backed securities, derivatives on asset-backed securities or both and (b) approximately $6.4 billion of subprime-related exposures in its lending and structuring business. See "Exposure to U.S. Residential Real Estate" on page 22 for a further discussion of such exposures and the associated losses recorded during the first quarter of 2008.

Write-Downs on Highly Leveraged Loans and Financing Commitments

Due to the continued dislocation of the credit markets and the reduced market interest in higher risk/higher yield instruments that began during the second half of 2007, liquidity in the market for highly leveraged financings has declined significantly.

Citigroup's exposure to highly leveraged financings totaled $38 billion at March 31, 2008 ($21 billion in funded and $17 billion in unfunded commitments). This compares to total exposure of $43 billion ($22 billion in funded and $21 billion in unfunded commitments) at December 31, 2007. During the first quarter of 2008, the Company recorded a $3.1 billion pretax write-down on these exposures, net of underwriting fees.

Since March 31, 2008, the Company transferred approximately $12 billion of loans to third parties, of which $8.5 billion relates to the highly leveraged loans and commitments. This structure allows Citigroup to lock in the sales proceeds and significantly reduces further downside price risk associated with these commitments. See "Highly Leveraged Financing Commitments" on page 56 for further discussion.

Write-Downs on Monoline Insurers

During the first quarter of 2008, Citigroup recorded pretax write-downs on credit market value adjustments (CMVA) of $1.5 billion on its exposure to monoline insurers. The CMVA is calculated by applying the counterparty's current credit spread to the expected exposure on the trade. The majority of those receivables relate to hedges on super senior positions that were executed with various monoline insurance companies. During the quarter, credit spreads on monoline insurers continued to widen and expected exposures increased. See "Direct Exposure to Monolines" on page 24 for a further discussion.

Write-downs on Auction Rate Securities

As of March 31, 2008 the Company reported $6.5 billion of auction rate securities classified as Trading assets. During the first quarter of 2008, S&B recorded $1.5 billion of pretax write-downs on auction rate securities, primarily due to failed auctions as liquidity diminished because of deterioration in the credit markets.

Write-downs on Alt-A Mortgage Securities in S&B

During the first quarter of 2008, Citigroup recorded pretax losses of approximately $1.0 billion, net of hedges, on Alt-A mortgage securities held in S&B. For these purposes, Alt-A mortgage securities are non-agency residential mortgage-backed securities (RMBS) where: (1) the underlying collateral has weighted average FICO scores between 680 and 720 or, (2) for instances where FICO scores are greater than 720, RMBS have 30% or less of the underlying collateral comprised of full documentation loans.

The Company had $18 billion in Alt-A mortgage securities carried at fair value at March 31, 2008 in S&B, which decreased from $22 billion at December 31, 2007. Of the $18 billion, $4.7 billion was classified as Trading assets, on which $900 million of fair value write-downs, net of hedging, were recorded in earnings, and $13.6 billion were classified as available-for-sale investments, on which $120 million of write-downs were recorded in earnings due to other than temporary impairments. In addition, $2.0 billion of pretax fair value write-downs were recorded in Accumulated Other Comprehensive Income (OCI).

Write-Downs on Commercial Real Estate Exposures

S&B's commercial real estate exposure can be split into three categories: assets held at fair value, loans and commitments, and equity and other investments. For the assets held at fair value, (which includes a $2 billion portfolio of available-for-sale securities), Citigroup recorded a $600 million of fair value write-downs, net of hedges, during the first quarter of 2008. See page 24 for a discussion of Citigroup's exposure to commercial real estate.

Credit Reserves

The $1.4 billion build in U.S. Consumer primarily reflected a weakening of leading credit indicators, including higher delinquencies on first and second mortgages, unsecured personal loans, credit cards and auto loans. Reserves also increased due to trends in the U.S. macro-economic environment, including the housing market downturn and rising unemployment rates, as well as portfolio growth.

The $424 million build in International Consumer was primarily driven by Mexico and India cards and India consumer finance, as well as by acquisitions and portfolio growth.

The build of $148 million in Markets & Banking primarily reflected an increase for specific counterparties.

Visa Restructuring and Litigation Matters

During the first quarter of 2008, Citigroup recorded a $633 million increase to pretax income resulting from events surrounding Visa. These events include (1) a $359 million gain on the redemption of Visa shares primarily recorded in U.S. Consumer; (2) a $108 million gain from an adjustment of the regional share allocation related to the fourth quarter 2007 Visa reorganization primarily recorded in International Consumer; and (3) a $166 million reduction of litigation

reserves that were originally booked in the fourth quarter of 2007 primarily in U.S. Consumer.

Repositioning Charges

In the first quarter of 2008, Citigroup recorded repositioning charges of $622 million related to Citigroup's ongoing reengineering plan, which will result in certain branch closings and headcount reductions of approximately 9,000 employees.

Sale of Redecard Shares

In the first quarter of 2008, Citigroup sold approximately 46.8 million Redecard shares, which decreased Citigroup's ownership in Redecard from approximately 23.9% to approximately 17%. An after-tax gain of $426 million ($661 million pretax) was recorded in the International Cards business.

Support of Structured Investment Vehicles (SIVs)

On December 13, 2007, the Company announced a commitment to provide support facilities to its Citi-advised Structured Investment Vehicles (SIVs) for the purpose of resolving the uncertainty regarding the SIVs' senior debt ratings. As a result of this commitment, the Company consolidated the SIVs' assets and liabilities onto Citigroup's Consolidated Balance Sheet.

On February 12, 2008, the Company finalized the terms of these support facilities, which take the form of a commitment to provide $3.5 billion of mezzanine capital to the SIVs. During March 2008, five of the six facilities were drawn in the aggregate amount of $3.4 billion.

For the first quarter of 2008, the Company recorded pretax trading account losses of $212 million related to these consolidated SIVs. See page 54 for further discussion.

Banamex Legal Vehicle Reorganization

During the first quarter of 2008, Banamex completed a legal vehicle reorganization. As a result, Citigroup recognized an operating expense reduction of $282 million, primarily in International Consumer.

Citi-Managed Fund Reserve

In the first quarter of 2008, GWM offered to facilitate the liquidation of its clients' investments in the Falcon multi-strategy fixed income funds (Falcon Funds) that have been negatively affected by recent market stress in certain fixed income assets. As a result, GWM recorded a $250 million reserve to cover the estimated cost of these arrangements.

Write-down of Intangible Asset Related to Old Lane

As a result of the Old Lane hedge fund notifying its investors that they will have the opportunity to redeem their investments, without restriction, effective July 31, 2008, CAI recorded a pretax write-down of $202 million during the first quarter of 2008 of intangible assets related to this multi-strategy hedge fund. In April 2008, substantially all unaffiliated investors had notified Old Lane of their intention to redeem their investments. See note 10 on page 74 for additional information.

Issuance of Preferred Stock

During the first quarter of 2008, the Company enhanced its capital base by issuing $12.5 billion of 7% convertible preferred stock in a private offering, and $3.2 billion of 6.5% convertible preferred stock in public offerings, and $3.715 billion of 8.125% of non-convertible preferred stock in public offerings. See Note 12 on page 78 for further information.

Nikko Cordial

Citigroup began consolidating Nikko Cordial's financial results and the related minority interest on May 9, 2007, when Nikko Cordial became a 61%-owned subsidiary. Citigroup later, in 2007, increased its ownership stake in Nikko Cordial to approximately 68%. Nikko Cordial results are included within Citigroup's Securities and Banking, Smith Barney and International Consumer businesses.

On January 29, 2008, Citigroup acquired the remaining Nikko Cordial shares outstanding by issuing 175 million Citigroup common shares (approximately $4.4 billion based on the exchange terms) in a public transaction in exchange for those Nikko Cordial shares.

Acquisition of Banco de Chile's US Branches

In 2007, Citigroup and Quiñenco entered into a definitive agreement to establish a strategic partnership that combines Citigroup operations in Chile with Banco de Chile's local banking franchise to create a banking and financial services institution with approximately 20% market share of the Chilean banking industry. The transaction closed on January 1, 2008.

Under the agreement, Citigroup contributed Citigroup's Chilean operations and other assets, and acquired an approximate 32.96% stake in LQIF, a wholly owned subsidiary of Quiñenco that controls Banco de Chile, and is accounted for under the equity method of accounting. As part of the overall transaction, Citigroup also acquired the U.S. branches of Banco de Chile for approximately $130 million. Citigroup has entered into an agreement to acquire an additional 17.04% stake in LQIF for approximately $1 billion within three years. The new partnership calls for active participation by Citigroup in the management of Banco de Chile including board representation at both LQIF and Banco de Chile.

Sale of CitiCapital

On April 17, 2008, Citigroup signed an agreement to sell CitiCapital, the equipment finance unit in North America. The sale consists of net assets of approximately $13 billion and will result in an after-tax loss of approximately $325 million, subject to closing adjustments. The loss will be recorded in the second quarter of 2008 and the sale is expected to close in the third quarter of 2008.

Sale of Citi Street

On May 2, 2008, Citigroup and State Street Corporation announced that they have entered into a definitive agreement to sell CitiStreet, a benefits servicing business, to ING Group in an all-cash transaction valued at $900 million. CitiStreet is a joint venture formed in 2000, which is owned 50 percent each by Citi and State Street. The acquisition is expected to close, pending customary closing conditions, by the end of the third quarter of 2008. The sale will result in an after-tax gain of approximately $200 million to Citigroup, subject to closing adjustments, which will be recorded at the time of closing.

SEGMENT, PRODUCT AND REGIONAL—NET INCOME AND REVENUE

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

Citigroup Net Income—Segment and Product View

			First Quarter
*In millions of dollars*			First Quarter						% Change
*In millions of dollars*			2008			2007(1)			% Change
Global Consumer
	U.S. Cards		$	595		$	897		(34	)%
	U.S. Retail Distribution			101			388		(74	)
	U.S. Consumer Lending			(476	)		359		NM
	U.S. Commercial Business			59			81		(27	)

		Total U.S. Consumer(2)	$	279		$	1,725		(84	)%

	International Cards		$	703		$	388		81	%
	International Consumer Finance			(168	)		25		NM
	International Retail Banking			728			540		35

		Total International Consumer	$	1,263		$	953		33	%

	Other		$	(108	)	$	(85	)	(27	)%

		Total Global Consumer	$	1,434		$	2,593		(45	)%

Markets & Banking
	Securities and Banking		$	(6,401	)	$	2,211		NM
	Transaction Services			732			449		63	%
	Other			(2	)		1		NM

		Total Markets & Banking	$	(5,671	)	$	2,661		NM

Global Wealth Management
	Smith Barney		$	142		$	324		(56	)%
	Private Bank			157			124		27

		Total Global Wealth Management	$	299		$	448		(33	)%

Alternative Investments			$	(509	)		222		NM
Corporate/Other(3)				(664	)		(912	)	27	%

Total Net Income (Loss)			$	(5,111	)	$	5,012		NM

(1): Reclassified to conform to the current period's presentation.
(2): U.S. disclosure includes Canada and Puerto Rico.
(3): The 2007 first quarter includes a $1,377 million ($871 million after-tax) Restructuring charge related to the Company's Structural Expense Initiatives project announced on April 11, 2007.
NM: Not meaningful

Citigroup Net Income—Regional View

			First Quarter
*In millions of dollars*			First Quarter						% Change
*In millions of dollars*			2008			2007			% Change
*U.S.(1)*
	Global Consumer		$	171		$	1,640		(90	)%
	Markets & Banking			(5,444	)		1,039		NM
	Global Wealth Management			163			361		(55	)

		Total *U.S*.	$	(5,110	)	$	3,040		NM

*Mexico*
	Global Consumer		$	340		$	372		(9	)%
	Markets & Banking			101			114		(11	)
	Global Wealth Management			12			12		—

		Total *Mexico*	$	453		$	498		(9	)%

*EMEA*
	Global Consumer		$	66		$	83		(20	)%
	Markets & Banking			(1,142	)		694		NM
	Global Wealth Management			26			7		NM

		Total *EMEA*	$	(1,050	)	$	784		NM

*Japan*
	Global Consumer		$	(8	)	$	45		NM
	Markets & Banking			(145	)		35		NM
	Global Wealth Management			27			—		—

		Total *Japan*	$	(126	)	$	80		NM

*Asia (Excluding Japan)*
	Global Consumer		$	370		$	383		(3	)%
	Markets & Banking			725			561		29
	Global Wealth Management			56			65		(14	)

		Total *Asia*	$	1,151		$	1,009		14	%

*Latin America*
	Global Consumer		$	495		$	70		NM
	Markets & Banking			234			218		7	%
	Global Wealth Management			15			3		NM

		Total *Latin America*	$	744		$	291		NM

Alternative Investments			$	(509	)	$	222		NM
Corporate/Other				(664	)		(912	)	27	%

Total Net Income (Loss)			$	(5,111	)	$	5,012		NM

Total International			$	1,172		$	2,662		(56	)%

(1): 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.
(2): The 2007 first quarter includes a $1,377 million ($871 million after-tax) restructuring charge related to the Company's Structural Expense Initiatives project announced on April 11, 2007.
NM: Not meaningful

Citigroup Revenues—Segment and Product View

			First Quarter
*In millions of dollars*			First Quarter						% Change
*In millions of dollars*			2008			2007(1)			% Change
Global Consumer
	U.S. Cards		$	3,217		$	3,294		(2	)%
	U.S. Retail Distribution			2,656			2,426		9
	U.S. Consumer Lending			1,710			1,551		10
	U.S. Commercial Business			422			474		(11	)

		Total U.S. Consumer(2)	$	8,005		$	7,745		3	%

	International Cards		$	3,053		$	1,739		76	%
	International Consumer Finance			809			890		(9	)
	International Retail Banking			3,325			2,759		21

		Total International Consumer	$	7,187		$	5,388		33	%

	Other		$	15		$	4		NM

		Total Global Consumer	$	15,207		$	13,137		16	%

Markets & Banking
	Securities and Banking		$	(6,823	)	$	7,277		NM
	Transaction Services			2,347			1,650		42	%
	Other			—			(1	)	100

		Total Markets & Banking	$	(4,476	)	$	8,926		NM

Global Wealth Management
	Smith Barney		$	2,643		$	2,246		18	%
	Private Bank			631			572		10

		Total Global Wealth Management	$	3,274		$	2,818		16	%

Alternative Investments			$	(358	)	$	562		NM
Corporate/Other				(428	)		16		NM

Total Net Revenues			$	13,219		$	25,459		(48	)%

(1): Reclassified to conform to the current periods presentation.
(2): U.S. disclosure includes Canada and Puerto Rico.
NM: Not meaningful

Citigroup Revenues—Regional View

			First Quarter
*In millions of dollars*			First Quarter					% Change
*In millions of dollars*			2008			2007		% Change
*U.S.(1)*
	Global Consumer		$	8,020		$	7,749	3	%
	Markets & Banking			(7,466	)		3,683	NM
	Global Wealth Management			2,377			2,385	—

		Total *U.S*.	$	2,931		$	13,817	(79	)%

*Mexico*
	Global Consumer		$	1,458		$	1,377	6	%
	Markets & Banking			203			227	(11	)
	Global Wealth Management			37			36	3

		Total *Mexico*	$	1,698		$	1,640	4	%

*EMEA*
	Global Consumer		$	1,861		$	1,446	29	%
	Markets & Banking			133			2,827	(95	)
	Global Wealth Management			170			108	57

		Total *EMEA*	$	2,164		$	4,381	(51	)%

*Japan*
	Global Consumer		$	640		$	615	4	%
	Markets & Banking			202			212	(5	)
	Global Wealth Management			415			—	—

		Total *Japan*	$	1,257		$	827	52	%

*Asia*
	Global Consumer		$	1,691		$	1,359	24	%
	Markets & Banking			1,827			1,404	30
	Global Wealth Management			212			234	(9	)

		Total *Asia*	$	3,730		$	2,997	24	%

*Latin America*
	Global Consumer		$	1,537		$	591	NM
	Markets & Banking			625			573	9	%
	Global Wealth Management			63			55	15

		Total *Latin America*	$	2,225		$	1,219	83	%

Alternative Investments			$	(358	)	$	562	NM
Corporate/Other				(428	)		16	NM

Total Net Revenues			$	13,219		$	25,459	(48	)%

Total International			$	11,074		$	11,064	—

(1): 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.
NM: Not meaningful

GLOBAL CONSUMER

Citigroup's Global Consumer Group provides a wide array of banking, lending, insurance and investment services through a network of 8,441 branches, approximately 20,000 ATMs and 538 Automated Lending Machines (ALMs), the Internet, telephone and mail, and the Primerica Financial Services sales force. 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
*In millions of dollars*	First Quarter						% Change
*In millions of dollars*	2008			2007			% Change
Net interest revenue	$	8,749		$	7,676		14	%
Non-interest revenue		6,458			5,461		18

Revenues, net of interest expense	$	15,207		$	13,137		16	%
Operating expenses		7,515			6,744		11
Provisions for loan losses and for benefits and claims		5,756			2,695		NM

Income before taxes and minority interest	$	1,936		$	3,698		(48	)%
Income taxes		493			1,095		(55	)
Minority interest, net of taxes		9			10		(10	)

Net income	$	1,434		$	2,593		(45	)%

Average assets (in billions of dollars)	$	739		$	702		5	%
Return on assets		0.78	%		1.50	%

Key Indicators—(in billions of dollars)
Average loans	$	531.4		$	461.8		15	%
Average deposits		312.2			271.6		15
Total branches		8,441			8,140		4

NM: Not meaningful

U.S. CONSUMER

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

	First Quarter
*In millions of dollars*	First Quarter						% Change
*In millions of dollars*	2008			2007			% Change
Net interest revenue	$	4,353		$	4,217		3	%
Non-interest revenue		3,652			3,528		4

Revenues, net of interest expense	$	8,005		$	7,745		3	%
Operating expenses		3,827			3,613		6
Provisions for loan losses and for benefits and claims		3,771			1,479		NM

Income before taxes and minority interest	$	407		$	2,653		(85	)%
Income taxes		124			920		(87	)
Minority interest, net of taxes		4			8		(50	)

Net income	$	279		$	1,725		(84	)%

Average assets (in billions of dollars)	$	467		$	492		(5	)%
Return on assets		0.24	%		1.42	%

Key Indicators—(in billions of dollars)
Average loans	$	367.2		$	335.8		9	%
Average deposits		122.6			117.4		4	%
Total branches		3,569			3,488		2	%

NM: Not meaningful

1Q08 vs. 1Q07

Net Interest Revenue was 3% higher than the prior year, as growth in average loans and deposits of 9% and 4%, respectively, was partially offset by spread compression.

Non-Interest Revenue increased 4%, primarily due to 4% growth in Cards purchase sales, a pretax gain on Visa shares of $349 million, higher gains on sales of mortgage loans, and growth in net servicing revenues in Consumer Lending. This increase was partially offset by lower securitization revenues in Cards primarily reflecting the impact of higher credit losses in the securitization trusts, as well as the absence of a prior-year $161 million pretax gain on the sale of MasterCard shares.

Operating expense growth of 6% was primarily driven by a repositioning charge of $130 million, volume growth, higher collection costs, acquisitions, and investment spending related to the 176 new branch openings during the past twelve months (99 in CitiFinancial and 77 in Citibank). This increase was partially offset by the $159 million reduction of the Visa-related litigation reserve.

Provisions for loan losses and for benefits and claims increased $2.3 billion, primarily reflecting a weakening of leading credit indicators, including higher delinquencies on first and second mortgages, unsecured personal loans, credit cards and auto loans. Credit costs also increased due to trends in the U.S. macro-economic environment, including the housing market downturn and rising unemployment rates, as well as portfolio growth. The net credit loss ratio increased 109 basis points to 2.39%.

INTERNATIONAL CONSUMER

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

		First Quarter
*In millions of dollars*		First Quarter						% Change
*In millions of dollars*		2008			2007			% Change
Net interest revenue		$	4,433		$	3,489		27	%
Non-interest revenue			2,754			1,899		45

Revenues, net of interest expense		$	7,187		$	5,388		33	%
Operating expenses			3,521			2,976		18
Provisions for loan losses and for benefits and claims			1,985			1,216		63

Income before taxes and minority interest		$	1,681		$	1,196		41	%
Income taxes			413			241		71
Minority interest, net of taxes			5			2		NM

Net income		$	1,263		$	953		33	%

Revenues, net of interest expense, by region:
	Mexico	$	1,458		$	1,377		6	%
	EMEA		1,861			1,446		29
	Japan—Cards and Retail Banking		334			181		85
	Asia		1,691			1,359		24
	Latin America		1,537			591		NM

Subtotal		$	6,881		$	4,954		39	%
	Japan Consumer Finance	$	306		$	434		(29	)

Total revenues		$	7,187		$	5,388		33	%

Net income by region
	Mexico	$	340		$	372		(9	)%
	EMEA		66			83		(20	)
	Japan—Cards and Retail Banking		61			36		69
	Asia		370			383		(3	)
	Latin America		495			70		NM

Subtotal		$	1,332		$	944		41	%
	Japan Consumer Finance		(69	)		9		NM

Total net income		$	1,263		$	953		33	%

Average assets (in billions of dollars)		$	260		$	199		31	%
Return on assets			1.95	%		1.94	%

Key indicators—(in billions of dollars)
Average loans		$	164.2		$	126.0		30	%
Average deposits			189.6			154.2		23
EOP AUMs		$	163.6		$	138.5		18
Total branches			4,872			4,652		5

NM: Not meaningful

1Q08 vs. 1Q07

Net Interest Revenue increased 27%, driven by 30% growth in average loans and 23% growth in average deposits, including the impact of the acquisitions of Grupo Financiero Uno, Egg, Grupo Cuscatlan, and Bank of Overseas Chinese. The impact of foreign currency translation also contributed to the increase in revenues.

Non-Interest Revenue increased 45%, primarily due to a $663 million gain on Redecard shares and a $97 million gain on the Initial Public Offering (IPO) of Visa shares, partially offset by a gain of $107 million on the sale of MasterCard shares in the prior-year period. The increase is also driven by a 41% increase in Cards purchase sales, a 14% increase in investment AUMs, and acquisitions, (including Nikko Cordial.)

Operating expenses increased by 18%, reflecting acquisitions, higher business volume and a repositioning charge of $106 million, partially offset by a $257 million benefit related to a legal vehicle restructuring in Mexico. The impact of foreign currency translation also contributed to the increase in expenses.

Provisions for loan losses and for benefits and claims increased 63%, primarily driven by Mexico and India, as well as by acquisitions and portfolio growth.

In Japan Consumer Finance, a net loss of $69 million reflected the difficult operating environment and the ongoing impact of consumer lending laws passed in the fourth quarter 2006.

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.

		First Quarter
*In millions of dollars*		First Quarter						% Change
*In millions of dollars*		2008			2007			% Change
Net interest revenue		$	4,356		$	2,462		77	%
Non-interest revenue			(8,832	)		6,464		NM

Revenues, net of interest expense		$	(4,476	)	$	8,926		NM
Operating expenses			5,298			5,127		3	%
Provision for credit losses			249			254		(2	)

Income (loss) before taxes and minority interest		$	(10,023	)	$	3,545		NM
Income taxes (benefits)			(4,367	)		869		NM
Minority interest, net of taxes			15			15		—

Net income (loss)		$	(5,671	)	$	2,661		NM

Revenues, net of interest expense, by region:
	U.S.	$	(7,466	)	$	3,683		NM
	Mexico		203			227		(11	)%
	EMEA		133			2,827		(95	)
	Japan		202			212		(5	)
	Asia		1,827			1,404		30
	Latin America		625			573		9

Total revenues		$	(4,476	)	$	8,926		NM

Total revenues, net of interest expense by product:
Securities and Banking		$	(6,823	)	$	7,277		NM
Transaction Services			2,347			1,650		42	%
Other			—			(1	)	100

Total revenues		$	(4,476	)	$	8,926		NM

Net income (loss) by region:
	U.S.	$	(5,444	)	$	1,039		NM
	Mexico		101			114		(11	)
	EMEA		(1,142	)		694		NM
	Japan		(145	)		35		NM
	Asia		725			561		29
	Latin America		234			218		7

Total net income (loss)		$	(5,671	)	$	2,661		NM

Total net income (loss) by product:
Securities and Banking		$	(6,401	)	$	2,211		NM
Transaction Services			732			449		63	%
Other			(2	)		1		NM

Total net income(loss)		$	(5,671	)	$	2,661		NM

NM: Not meaningful

1Q08 vs. 1Q07

Revenues, net of interest expense, were negative in Securities and Banking due to substantial write-downs and losses related to the fixed income and credit markets. Included in these losses are $6.0 billion of write-downs on subprime-related direct exposure, $3.1 billion of write-downs (net of underwriting fees) on funded and unfunded highly leveraged finance commitments, $1.5 billion of downward credit market value adjustments related to exposure to monoline insurers, and $1.5 billion of write-downs on auction rate securities inventory due to failed auctions and deterioration in the credit markets. Transaction Services revenues grew a record 42%, with records in all three businesses (cash management, securities services and trade) driven by strong growth in customer liability balances and assets under custody.

Operating expenses increased due to Transaction Services' increased business volumes and the acquisition of The Bisys Group. Expenses decreased in Securities and Banking from a decline in incentive compensation costs, partially offset by a $295 million repositioning charge.

The provision for credit losses decreased, due primarily to the absence of a $290 million net charge to increase loan loss reserves in the prior-year period, offset by an increase in net credit losses of $123 million and a $157 million incremental charge to increase loan loss reserves for specific counterparties.

GLOBAL WEALTH MANAGEMENT

Global Wealth Management is composed of the Smith Barney Private Client businesses (including Citigroup Wealth Advisors, Nikko Cordial, Quilter and the Citicorp Investment Services business), Citi Private Bank and Citi Investment Research.

		First Quarter
*In millions of dollars*		First Quarter					% Change
*In millions of dollars*		2008			2007		% Change
Net interest revenue		$	571		$	529	8	%
Non-interest revenue			2,703			2,289	18

Revenues, net of interest expense		$	3,274		$	2,818	16	%
Operating expenses			2,780			2,102	32
Provision for loan losses			21			17	24

Income before taxes and minority interest		$	473		$	699	(32	)%
Income taxes			168			251	(33	)
Minority interest, net of taxes			6			—	—

Net income		$	299		$	448	(33	)%

Revenues, net of interest expense, by region:
	U.S.	$	2,377		$	2,385	—
	Mexico		37			36	3	%
	EMEA		170			108	57
	Japan		415			—	—
	Asia		212			234	(9	)
	Latin America		63			55	15

Total revenues		$	3,274		$	2,818	16	%

Net income by region:
	U.S.	$	163		$	361	(55	)%
	Mexico		12			12	—
	EMEA		26			7	NM
	Japan		27			—	—
	Asia		56			65	(14	)
	Latin America		15			3	NM

Total net income		$	299		$	448	(33	)%

Key indicators: (in billions of dollars)
Total assets under fee-based management		$	482		$	418	15	%
Total client assets(1)			1,707			1,493	14
Net client asset flows		$	(1	)	$	6	NM
Financial advisors (FA) / bankers(1)			15,241			13,605	12
Annualized revenue per FA / banker (in thousands of dollars)			858			837	3
Average deposits and other customer liability balances			129			113	14
Average loans			64			46	39

(1): During the second quarter of 2007, U.S. Consumer's Retail Distribution transferred approximately $47 billion of client assets, 686 Financial Advisors and 79 branches to Smith Barney related to the consolidation of Citicorp Investment Services (CIS) into Smith Barney.
NM: Not meaningful

1Q08 vs. 1Q07

Revenues, net of interest expense, increased 16% primarily due to the impact of the Nikko Cordial acquisition, an increase in fee-based revenues reflecting the continued advisory-based strategy, an increase in Structured Lending revenue in the U.S., and an increase in international revenues driven mainly by growth in Banking and Capital Markets revenue in EMEA.

Total client assets, including assets under fee-based management, increased $214 billion, or 14%, mainly reflecting the inclusion of client assets from Nikko Cordial. Net flows declined compared to the prior year, to ($1) billion from $6 billion. GWM had 15,241 financial advisors/bankers as of March 31, 2008, compared with 13,605 as of March 31, 2007, driven by the Nikko Cordial acquisition and the consolidation of the legacy Citicorp Investment Services business.

Operating expenses increased 32% primarily due to the impact of acquisitions, a reserve of $250 million related to an offer of facilitating the liquidation of investments in the Falcon fund for its clients, higher variable compensation and repositioning charges.

The provision for loan losses increased 24% to $21 million, primarily driven by higher write-offs of loans in Asia.

ALTERNATIVE INVESTMENTS

Alternative Investments (CAI) manages capital on behalf of Citigroup, as well as for third-party institutional and high-net-worth investors. CAI 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.

		First Quarter
*In millions of dollars*		First Quarter						% Change
*In millions of dollars*		2008			2007			% Change
Net interest revenue		$	(34	)	$	(20	)	(70	)%
Non-interest revenue			(324	)		582		NM

Total revenues, net of interest expense		$	(358	)	$	562		NM

Net realized and net change in unrealized gains		$	(462	)	$	444		NM
Fees, dividends and interest			38			35		9	%
Other			(46	)		(43	)	(7	)

Total proprietary investment activities revenues			(470	)		436		NM
Client revenues(1)			112			126		(11	)%

Total revenues, net of interest expense		$	(358	)	$	562		NM
Operating expenses			498			180		NM
Provision for loan losses			—			1		(100	)%

Income (loss) before taxes and minority interest		$	(856	)	$	381		NM

Income taxes			(304	)		138		NM
Minority interest, net of taxes			(43	)		21		NM

Net income (loss)		$	(509	)	$	222		NM

Revenue by product:
Client(1)		$	112		$	126		(11	)%

	Private Equity	$	115		$	361		(68	)%
	Hedge Funds		(257	)		47		NM
	Other		(328	)		28		NM

Proprietary		$	(470	)		436		NM

Total		$	(358	)	$	562		NM

Key indicators: (in billions of dollars)
Capital under management:
	Client	$	43.4		$	42.9		1	%
	Proprietary		10.9			10.8		1

Total		$	54.3		$	53.7		1	%

(1): Includes fee income.
NM: Not meaningful

The Proprietary Portfolio of CAI consists of private equity, single- and multi-manager hedge funds, real estate and Legg Mason, Inc. (Legg Mason) preferred shares. Private equity, which constitutes the largest proprietary investments on both a direct and an indirect basis, is in the form of equity and mezzanine debt financing in companies across a broad range of industries worldwide, including investments in developing economies. Such investments include Citigroup Venture Capital International Brazil, LP (CVC/Brazil, formerly CVC/Opportunity Equity Partners, LP), which has invested primarily in companies privatized by the government of Brazil in the mid-1990s.

The Company's investment in CVC/Brazil was previously subject to a variety of unresolved matters, including the pending litigation involving some of its portfolio companies. On April 25, 2008, the Company executed settlement agreements which resolved these litigation uncertainties. The resolution of these uncertainties will facilitate the sale of certain portfolio companies. Certain sales transactions may be subject to regulatory approvals.

The Client Portfolio is composed of single- and multi-manager hedge funds, real estate, managed futures, private equity, and a variety of leveraged fixed income products (credit structures). Products are distributed to investors directly by CAI and through GWM's Private Bank and Smith Barney platforms. Revenue includes management and performance fees earned on the portfolio.

The remaining 8.4 million shares of Legg Mason were sold during the first quarter of 2008.

On July 2, 2007, the Company completed the acquisition of Old Lane Partners, LP 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 assets under management and private equity commitments of approximately $4.5 billion. In the first quarter of 2008, Old Lane notified investors in its multi-strategy hedge fund that they would have the opportunity to redeem their investments in the fund, without restriction, effective July 31, 2008. In April 2008, substantially all unaffiliated investors had notified Old Lane of their intention to redeem their investments. The Company is currently evaluating alternatives for the restructuring of the Old Lane multi-strategy hedge fund.

On February 20, 2008, the Company entered into a $500 million credit facility with the Falcon multi-strategy fixed income funds (Falcon funds) managed by CAI. As a result of providing this facility, the Company became the primary

beneficiary of the Falcon funds and consolidated the assets and liabilities in its Consolidated Balance Sheet. On March 31, 2008, the total assets of the Falcon funds were approximately $4 billion.

On March 3, 2008, the Company made an equity investment of $661 million (under a $1 billion commitment) which provides for gain sharing with unaffiliated investors, in the Municipal Opportunity Funds (MOFs). MOFs are funds managed by Alternative Investments that make leveraged investments in tax-exempt municipal bonds and accept investments through feeder funds known as ASTA and MAT. As a result of the Company's equity commitment, the Company became the primary beneficiary of the MOFs and consolidated the assets and liabilities in its Consolidated Balance Sheet. On March 31, 2008, the total assets of the MOFs were approximately $2 billion.

1Q08 vs. 1Q07

Revenues, net of interest expense, of $(358) million for the first quarter of 2008 decreased $920 million.

Total proprietary investment activity revenues, of $(470) million for the first quarter of 2008 were composed of revenues from private equity of $115 million, hedge funds of $(257) million and other investment activity of $(328) million. Private equity revenue decreased $246 million from the first quarter of 2007, driven by lower gains. Hedge fund revenue decreased $304 million, largely due to lower investment performance. Other investment activities revenue decreased $356 million from the first quarter of 2007, largely due to a $212 million MTM loss in the SIVs and lower investment performance. Client revenues decreased $14 million, reflecting lower performance of fixed income-oriented products, partially offset by the inclusion of Old Lane.

Operating expenses in the first quarter of 2008 of $498 million increased $318 million from the first quarter of 2007, primarily due to inclusion of Old Lane and the write down of $202 million of the intangible asset as a result of the offer to investors to redeem their investments in the Old Lane multi-strategy hedge fund.

Minority interest, net of taxes, in the first quarter of 2008 of $(43) million decreased $64 million from 2007, primarily due to lower 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.

Client capital under management of $43.4 billion at March 31, 2008 increased $0.5 billion from year-ago levels, due to the acquisition of Old Lane in 2007 and capital raised in private equity funds, offset by mark-to-market losses in fixed income-oriented products.

CORPORATE/OTHER

Corporate/Other includes treasury results, unallocated corporate expenses, offsets to certain line-item reclassifications reported in the business segments (intersegment eliminations), and unallocated taxes.

	First Quarter
*In millions of dollars*	First Quarter
*In millions of dollars*	2008			2007
Net interest revenue	$	(169	)	$	(35	)
Non-interest revenue		(259	)		51

Revenues, net of interest expense	$	(428	)	$	16
Operating expense		125			1,418
Provision for loan losses		—			—

(Loss) before taxes and minority interest	$	(553	)	$	(1,402	)
Income taxes (benefits)		120			(491	)
Minority interest, net of taxes		(9	)		1

Net (loss)	$	(664	)	$	(912	)

1Q08 vs. 1Q07

Revenues, net of interest expense, decreased primarily due to mark-to-market losses on Nikko Cordial equity holdings in the current quarter, including a $212 million write-down of Nikko Cordial's interest in an equity investment, as well as the absence of a prior-year gain on the sale of certain corporate-owned assets.

Operating expenses, excluding the 2007 first quarter restructuring charge of $1,377 million, increased primarily due to lower intersegment eliminations, as well as higher technology and other unallocated expenses.

Income tax benefits decreased due to a lower pretax loss in the 2008 first quarter and additional taxes held at Corporate.

MANAGING GLOBAL RISK

Citigroup's risk management framework balances strong themed corporate oversight with well-defined independent risk management functions within each business. The Citigroup risk management framework is described in Citigroup's 2007 Annual Report on Form 10-K.

DETAILS OF CREDIT LOSS EXPERIENCE

*In millions of dollars*		1st Qtr. 2008			4th Qtr.(1) 2007			3rd Qtr.(1) 2007			2nd Qtr.(1) 2007			1st Qtr.(1) 2007
Allowance for loan losses at beginning of period		$	16,117		$	12,728		$	10,381		$	9,510		$	8,940

Provision for loan losses
	Consumer	$	5,502		$	6,539		$	4,622		$	2,577		$	2,452
	Corporate		249			883			154			(57	)		254

		$	5,751		$	7,422		$	4,776		$	2,520		$	2,706

Gross credit losses
Consumer
	In U.S. offices	$	2,357		$	1,914		$	1,382		$	1,264		$	1,290
	In offices outside the U.S.		1,851			1,601			1,617			1,346			1,341
Corporate
	In U.S. offices		40			596			18			22			7
	In offices outside the U.S.		97			169			74			30			29

		$	4,345		$	4,280		$	3,091		$	2,662		$	2,667

Credit recoveries
Consumer
	In U.S. offices	$	179		$	168		$	166		$	175		$	214
	In offices outside the U.S.		328			341			279			343			286
Corporate
	In U.S. offices		3			15			1			9			18
	In offices outside the U.S.		33			55			59			80			40

		$	543		$	579		$	505		$	607		$	558

Net credit losses
	In U.S. offices	$	2,215		$	2,327		$	1,233		$	1,102		$	1,065
	In offices outside the U.S.		1,587			1,374			1,353			953			1,044

Total			3,802			3,701		$	2,586		$	2,055		$	2,109

Other—net(2)(3)(4)(5)(6)		$	191		$	(332	)	$	157		$	406		$	(27	)

Allowance for loan losses at end of period			18,257			16,117		$	12,728		$	10,381		$	9,510

Allowance for unfunded lending commitments(7)		$	1,250		$	1,250		$	1,150		$	1,100		$	1,100

Total allowance for loan losses and unfunded lending commitments		$	19,507		$	17,367		$	13,878		$	11,481		$	10,610

Net consumer credit losses		$	3,701		$	3,006		$	2,554		$	2,092		$	2,131
As a percentage of average consumer loans			2.50	%		2.02	%		1.81	%		1.56	%		1.70	%

Net corporate credit losses/(recoveries)		$	101		$	695		$	32		$	(37	)	$	(22	)
As a percentage of average corporate loans			0.05	%		0.34	%		0.02	%		NM			NM

(1): Reclassified to conform to the current period's presentation
(2): The first quarter of 2008 primarily includes reductions to the credit loss reserves of $58 million related to securitizations, additions of $50 million related to the Bank of Overseas Chinese acquisition and additions mainly related to foreign currency translation.
(3): The fourth quarter of 2007 primarily includes reductions to the credit loss reserves of $150 million related to securitizations and $7 million related to transfers to Loans held-for-sale, reductions of $151 million related to purchase price adjustments to the Egg Bank acquisition and reductions of $83 million related to the transfer of the U.K. Citifinancial portfolio to Loans held-for-sale.
(4): The third quarter of 2007 primarily includes additions related to purchase accounting adjustments related to the acquisition of Grupo Cuscatlan of $181 million offset by reductions of $73 million related to securitizations.
(5): The second quarter of 2007 primarily includes additions to the loan loss reserve of $505 million related to the acquisition of Egg and Nikko Cordial, partially offset by reductions of $70 million related to securitizations and $77 million related to a balance sheet reclassification to Loans held-for-sale in the U.S. Cards portfolio.
(6): The first quarter of 2007 includes reductions to the loan loss reserve of $98 million related to a balance sheet reclassification 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.
(7): 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

Consumer Loan Balances, Net of Unearned Income

	End of Period						Average
*In billions of dollars*	Mar. 31, 2008		Dec. 31,(1) 2007		Mar. 31,(1) 2007		1st Qtr. 2008		4th Qtr.(1) 2007		1st Qtr.(1) 2007
On-balance sheet(2)	$	593.0	$	587.7	$	512.2	$	595.6	$	585.2	$	507.9
Securitized receivables (all in U.S. Cards)		109.3		108.1		98.6		105.6		99.6		97.3
Credit card receivables held-for-sale(3)		0.9		1.0		3.0		1.0		2.7		3.0

Total managed(4)	$	703.2	$	696.8	$	613.8	$	702.2	$	687.5	$	608.2

(1): Reclassified to conform to current period's presentation.
(2): 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 2008, approximately $3 billion and $3 billion for the fourth quarter of 2007 and approximately $2 billion and $2 billion for the first quarter of 2007, respectively, which are included in Consumer Loans on the Consolidated Balance Sheet.
(3): Included in Other Assets on the Consolidated Balance Sheet.
(4): This table presents loan information on a held basis and shows the impact of securitizations to reconcile to a managed basis. 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 are consistent with the way management reviews operating performance and allocates resources. Held-basis reporting is the related GAAP measure.

Citigroup's total allowance for loans, leases and unfunded lending commitments of $19.5 billion is available to absorb probable credit losses inherent in the entire portfolio. For analytical purposes only, the portion of Citigroup's allowance for loan losses attributed to the Consumer portfolio was $14.4 billion at March 31, 2008, $12.4 billion at December 31, 2007 and $6.3 billion at March 31, 2007. The increase in the allowance for loan losses from March 31, 2007 of $8.1 billion included net builds of $7.9 billion.

The builds consisted of $7.8 billion in Global Consumer ($6.2 billion in U.S. Consumer and $1.6 billion in International Consumer), and $93 million in Global Wealth Management.

The build of $6.2 billion in U.S. Consumer primarily reflected an increase in the losses embedded in the portfolio based on weakening leading credit indicators, including increased delinquencies on first and second mortgages, unsecured personal loans, credit cards, and auto loans. Also, the build reflected trends in the U.S. macroeconomic environment, including the housing market downturn, rising unemployment rates and portfolio growth. The build of $1.6 billion in International Consumer primarily reflected portfolio growth and the impact of recent acquisitions and credit deterioration in certain countries.

On-balance-sheet consumer loans of $593.0 billion increased $80.8 billion, or 16%, from March 31, 2007, primarily driven by U.S. Consumer Lending, U.S. Retail Distribution, International Cards, International Retail Banking and Private Bank. 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.

EXPOSURE TO U.S. RESIDENTIAL REAL ESTATE

Subprime-Related Direct Exposure in Securities and Banking

The following table summarizes Citigroup's U.S. subprime-related direct exposures in Securities and Banking (S&B) at March 31, 2008 and December 31, 2007:

*In billions of dollars*		December 31, 2007 exposures		First quarter 2008 write-downs			First quarter 2008 sales/transfers(1)			March 31, 2008 exposures
Direct ABS CDO Super Senior Exposures:
	Gross ABS CDO Super Senior Exposures (A)	$	39.8							$	33.2
	Hedged Exposures (B)		10.5								10.5
Net ABS CDO Super Senior Exposures:
	ABCP/CDO(2)	$	20.6	$	(3.1	)	$	(0.7	)	$	16.8	(4)
	High grade		4.9		(1.0	)		(0.1	)		3.8	(5)
	Mezzanine		3.6		(1.5)	(3)		(0.1	)		2.0	(6)
	ABS CDO-squared		0.2		(0.1)	(3)		(0.0	)		0.1

Total Net Direct ABS CDO Super Senior Exposures (A-B)=(C)		$	29.3	$	(5.7	)	$	(0.9	)	$	22.7

Lending & Structuring Exposures:
	CDO warehousing/unsold tranches of ABS CDOs	$	0.2	$	(0.1	)	$	0.1		$	0.2
	Subprime loans purchased for sale or securitization		4.0		(0.2	)		(0.2	)		3.6
	Financing transactions secured by subprime		3.8		(0.0	)		(1.1	)		2.6

Total Lending and Structuring Exposures (D)		$	8.0	$	(0.3	)	$	(1.2	)	$	6.4

Total Net Exposures (C+D)(7)		$	37.3	$	(6.0	)	$	(2.1	)	$	29.1

Credit Adjustment on Hedged Counterparty Exposures (E)(8)				$	(1.5	)

Total Net Write-Downs (C+D+E)				$	(7.5	)

(1): Reflects sales, transfers, repayment of principal and liquidations.
(2): Super senior tranches of older vintage, high grade ABS CDOs. During the fourth quarter of 2007 these were consolidated on Citigroup's balance sheet.
(3): Includes $79 million recorded in credit costs.
(4): The $16.8 billion of ABCP/CDO exposure as of March 31, 2008 is comprised of the following vintages (41% of 2004 or prior) (40% of 2005) and (19% of 2006 or later).
(5): The $3.8 billion of High grade exposure as of March 31, 2008 is comprised of the following vintages (6% of 2004 or prior) (14% of 2005) and (80% of 2006 or later).
(6): The $2.0 billion of Mezzanine exposure as of March 31, 2008 is comprised of the following vintages (8% of 2004 or prior) (41% of 2005) and (51% of 2006 or later).
(7): Comprised of net CDO Super Senior exposures and gross Lending and Structuring exposures.
(8): SFAS 157 adjustment related to counterparty credit risk.

Subprime-Related Direct Exposure in Securities and Banking

The Company had approximately $29.1 billion in net U.S. subprime-related direct exposures in its Securities and Banking business at March 31, 2008.

The exposure consisted of (a) approximately $22.7 billion of net exposures in the super senior tranches (i.e., most senior tranches) of collateralized debt obligations which are collateralized by asset-backed securities, derivatives on asset-backed securities or both (ABS CDOs), and (b) approximately $6.4 billion of subprime-related exposures in its lending and structuring business.

Direct ABS CDO Super Senior Exposures

The net $22.7 billion in ABS CDO super senior exposures as of March 31, 2008 is collateralized primarily by subprime residential mortgage-backed securities (RMBS), derivatives on RMBS or both. These exposures include $16.8 billion in commercial paper (ABCP) issued as the super senior tranches of ABS CDOs and approximately $5.9 billion of other super senior tranches of ABS CDOs.

Citigroup's CDO super senior subprime direct exposures, $22.7 billion at March 31, 2008, are Level 3 assets and are subject to valuation based on significant unobservable inputs. Accordingly, fair value of these exposures is based on estimates of future cash flows from the mortgage loans underlying the assets of the of the ABS CDOs. To determine the performance of the underlying mortgage loan portfolios , the Company estimates the prepayments, defaults and loss severities based on a number of macro-economic factors, including housing price changes, unemployment rates and interest rates and borrower and loan attributes such as age, credit scores, documentation status, loan-to-value (LTV) ratios, and debt-to-income (DTI) ratios. The model is calibrated using available mortgage loan information including historical loan performance. In addition, the methodology estimates the impact of geographic concentration of mortgages, and the impact of reported fraud in the origination of subprime mortgages. An appropriate discount rate is then applied to the cash flows generated for each super senior ABS CDO tranches, in order to estimate its current fair value.

When necessary, the valuation methodology used by Citigroup is refined and the inputs used for the purposes of estimation are modified, in part, to reflect ongoing market developments. More specifically, two refinements were made during the first quarter of 2008: a more direct method of calculating estimated housing-price changes and a more

refined method for calculating the discount rate. During the fourth quarter 2007, housing-price changes were estimated using a series of factors including projected national housing-price changes. During the first quarter of 2008 housing-price changes were estimated using a forward looking projection based on the S&P Case-Shiller Home Price Index. This change facilitates a more direct estimation of subprime house price changes. The valuation of the Company's direct ABS CDO super senior exposures as of March 31, 2008 assumes a cumulative decline in U.S. house prices from peak to trough of 20%. This consists of the 9% decline observed pre-2008, with additional assumed declines of 8% and 3% in 2008 and 2009, respectively. Prior to the first quarter of 2008, the discount rate used was based on observable CLO spreads applicable to the assumed rating of each ABS CDO super senior tranche. During the first quarter of 2008, the discount rate was based on a weighted average combination of the implied spreads from single named ABS bond prices, ABX indices and CLO spreads depending on vintage and asset types. This refinement was made, in part, in response to the combination of continuing rating agency downgrades of RMBS and ABS CDOs and the absence of observable CLO spreads at the resulting rating levels.

The primary drivers that currently impact the super senior valuations are the discount rates used to calculate the present value of projected cash flows and projected mortgage loan performance. In valuing its direct ABS CDO super senior exposures, the Company has made its best estimate of the key inputs that should be used in its valuation methodology. However, the size and nature of these positions as well as current market conditions are such that changes in inputs such as the discount rates used to calculate the present value of the cash flows can have a significant impact on the reported value of these exposures. For instance, each 10 basis point change in the discount rate used generally results in an approximate $90 million change in the fair value of the Company's direct ABS CDO super senior exposures as at March 31, 2008. This applies to both decreases in the discount rate (which would increase the value of these assets and reduce reported losses) and increases in the discount rate (which would decrease the value of these assets and increase reported losses).

Estimates of the fair value of the CDO super senior exposures depend on market conditions and are subject to further change over time. In addition, while Citigroup believes that the methodology used to value these exposures is reasonable, the methodology is subject to continuing refinement, including those made as a result of market developments. Further, any observable transactions in respect of some or all of these exposures could be employed in the fair valuation process in accordance with and in the manner called for by SFAS 157.

Lending and Structuring Exposures

The $6.4 billion of subprime-related exposures includes approximately $0.2 billion of CDO warehouse inventory and unsold tranches of ABS CDOs, approximately $3.6 billion of actively managed subprime loans purchased for resale or securitization, at a discount to par, during 2007, and approximately $2.6 billion of financing transactions with customers secured by subprime collateral. These amounts represent fair value determined based on observable inputs and other market data. The majority of the change reflects sales, transfers and liquidations.

S&B also has trading positions, both long and short, in U.S. subprime RMBS and related products, including ABS CDOs, which are not included in the figures above. The exposure from these positions is actively managed and hedged, although the effectiveness of the hedging products used may vary with material changes in market conditions.

Direct Exposure to Monolines

In its Securities and Banking business, the Company has exposure to various monoline bond insurers listed in the table below ("Monolines") from hedges on certain investments and from trading positions. The hedges are composed of credit default swaps and other hedge instruments. The Company recorded an additional $1.5 billion in credit market value adjustments during the first quarter of 2008 on the market value exposures to the Monolines as a result of widening credit spreads.

The following table summarizes the net market value of the Company's direct exposures to and the corresponding notional amount of transactions with the various Monolines as of March 31, 2008 and December 31, 2007 in Securities and Banking:

	March 31, 2008
	March 31, 2008					Net Market Value Exposure December 31, 2007
*In millions of dollars at March 31, 2008*	Net Market Value Exposure			Notional Amount of Transactions		Net Market Value Exposure December 31, 2007
*Direct Subprime ABS CDO Super Senior:*
AMBAC	$	2,946		$	5,485	$	1,815
FGIC		1,031			1,460		909
ACA		531			600		438
Radian		—			—		100

Subtotal Direct Subprime ABS CDO Super Senior	$	4,508		$	7,545	$	3,262

Trading Assets—Subprime:
AMBAC	$	1,207		$	1,400	$	1,150

Trading Assets—Subprime	$	1,207		$	1,400	$	1,150

Trading Assets—Non Subprime:
MBIA	$	1,386		$	5,874	$	395
FSA		—			—		121
ACA		122			1,938		50
Assured		47			503		7
Radian		13			350		5
AMBAC		(7	)		1,759		—

Trading Assets—Non Subprime	$	1,571		$	14,345	$	578

Subtotal Trading Assets	$	2,778		$	15,745	$	1,728

Credit Market Value Adjustment	$	(2,461	)			$	(967	)

Total Net Market Value Direct Exposure	$	4,825				$	4,023

As of March 31, 2008 and December 31, 2007, the Company had $10.5 billion notional amount of hedges against its Direct Subprime ABS CDO Super Senior positions. Of that $10.5 billion, $7.6 billion was purchased from Monolines and is included in notional amount of transactions in the table above. The net market value of the hedges provided by the Monolines against our Direct Subprime ABS CDO Super Senior positions was $4.5 billion as of March 31, 2008 and $3.3 billion as of December 31, 2007.

In addition, there was $2.8 billion and $1.7 billion of net market value exposure to Monolines related to our trading assets as of March 31, 2008 and December 31, 2007, respectively. Trading assets include trading positions, both long and short, in U.S. subprime residential mortgage-backed securities (RMBS) and related products, including ABS CDOs. There were $1.4 billion in notional amount of transactions related to subprime positions with a net market value exposure of $1.2 billion as of March 31, 2008 and December 31, 2007. The notional amount of transactions related to the remaining non-subprime trading assets as of March 31, 2008 was $14.3 billion with a corresponding net market value exposure of $1.6 billion. The $14.3 billion notional amount of transactions comprised $6.1 billion primarily in interest rate swaps with a corresponding net market value exposure of $40 million. The remaining notional amount of $8.2 billion was in the form of credit default swaps and total return swaps with a net market value exposure of $1.531 billion.

The corresponding amounts for the notional amount of transactions related to the remaining non-subprime trading assets of December 31, 2007 was $11.3 billion with a corresponding net market value exposure of $578 million. The $11.3 billion notional amount of transactions comprised $4.1 billion primarily in interest rate swaps with a corresponding net market value exposure of $34 million. The remaining notional amount of $7.2 billion was in the form of credit default swaps and total return swaps with a net market value of $544 million.

The net market value exposure, net of payable and receivable positions, represents the market value of the contract as of March 31, 2008. The notional amount of the transactions, including both long and short positions, is used as a reference value to calculate payments. The credit market value adjustment is a downward adjustment to the net market value exposure to a counterparty to reflect the counterparty's creditworthiness.

In Global Consumer, the Company has purchased mortgage insurance from various monoline mortgage insurers on first mortgage loans. The notional amount of this insurance protection is approximately $600 million with nominal pending claims against this notional amount.

In addition, Citigroup has indirect exposure to Monolines in various other parts of its businesses. For example, corporate or municipal bonds in the trading business may be insured by the Monolines. In this case, Citigroup is not a party to the insurance contract. The previous table does not capture this type of indirect exposure to the Monolines.

Exposure to Commercial Real Estate

In its Securities and Banking and Alternative Investments businesses, the Company, through its business activities and as a capital markets participant, incurs exposures that are directly or indirectly tied to the global commercial real estate market. These exposures are represented primarily by the following three categories:

(1) Assets held at fair value: approximately $16 billion of securities, loans and other items linked to commercial real estate that are carried at fair value as Trading assets, approximately $5 billion of commercial real estate loans and loan commitments classified as held-for-sale and measured at the lower of cost or market (LOCOM), and approximately $2 billion of securities backed by commercial real estate carried at fair value as available-for-sale Investments. Changes in fair value for these Trading assets and held-for-sale loans and loan commitments are reported in current earnings, while changes in fair value for these available for sale Investments are reported in OCI with other than temporary impairments reported in current earnings.

The majority of these exposures are classified as Level 3 in the fair value hierarchy. In recent months, weakening activity in the trading markets for some of these instruments resulted in reduced liquidity, thereby decreasing the observable inputs for such valuations and could have an adverse impact on how these instruments are valued in the future if such conditions persist. Changes in the values of these positions are recognized through revenues.

(2) Loans and commitments: approximately $21 billion of commercial real estate loan exposures, including $12 billion of funded loans that are classified as held-for investment and $9 billion of unfunded loan commitments, all of which are recorded at cost less loan loss reserves. The impact from changes in credit is reflected in the calculation of the allowance for loan losses and in net credit losses.

(3) Equity and other investments: Approximately $6 billion of equity and other investments such as limited partner fund investments.

CITIGROUP DERIVATIVES

Notionals(1)

			Trading derivatives(2)				Asset/liability management hedges(3)
*In millions of dollars*			March 31, 2008		December 31, 2007		March 31, 2008		December 31, 2007
Interest rate contracts
	Swaps		$	18,977,760	$	16,433,117	$	607,524	$	521,783
	Futures and forwards			2,345,714		1,811,599		180,841		176,146
	Written options			3,667,458		3,479,071		23,061		16,741
	Purchased options			3,871,563		3,639,075		119,537		167,080

Total interest rate contract notionals			$	28,862,495	$	25,362,862	$	930,963	$	881,750

Foreign exchange contracts
	Swaps		$	1,012,926	$	1,062,267	$	70,257	$	75,622
	Futures and forwards			2,936,731		2,795,180		42,887		46,732
	Written options			744,996		653,535		719		292
	Purchased options			732,388		644,744		988		686

Total foreign exchange contract notionals			$	5,427,041	$	5,155,726	$	114,851	$	123,332

Equity contracts
	Swaps		$	149,913	$	140,256	$	—	$	—
	Futures and forwards			34,543		29,233		—		—
	Written options			775,271		625,157		—		—
	Purchased options			746,779		567,030		—		—

Total equity contract notionals			$	1,706,506	$	1,361,676	$	—	$	—

Commodity and other contracts
	Swaps		$	35,346	$	29,415	$	—	$	—
	Futures and forwards			82,820		66,860		—		—
	Written options			25,563		27,087		—		—
	Purchased options			29,347		30,168		—		—

Total commodity and other contract notionals			$	173,076	$	153,530	$	—	$	—

Credit derivatives(4)
	Citigroup as the Guarantor:
		Credit default swaps	$	1,857,744	$	1,755,440	$	—	$	—
		Total return swaps		7,165		12,121		—		—
		Credit default options		85		276		—		—
	Citigroup as the Beneficiary:
		Credit default swaps	$	2,021,534	$	1,890,611	$	—	$	—
		Total return swaps		21,226		15,895		—		—
		Credit default options		187		450		—		—

Total credit derivatives			$	3,907,941	$	3,674,793	$	—	$	—

Total derivative notionals			$	40,077,059	$	35,708,587	$	1,045,814	$	1,005,082

[Table Continues on the following page.]

Mark-to-Market (MTM) Receivables/Payables

			Derivatives receivables—MTM						Derivatives payables—MTM
*In millions of dollars*			March 31, 2008			December 31, 2007			March 31, 2008			December 31, 2007
Trading Derivatives(2)
	Interest rate contracts		$	382,454		$	269,400		$	374,712		$	257,329
	Foreign exchange contracts			123,719			77,942			118,963			71,991
	Equity contracts			31,075			27,934			49,619			66,916
	Commodity and other contracts			12,380			8,540			12,929			8,887
	Credit derivatives:
		Citigroup as the Guarantor		3,425			4,967			139,560			73,103
		Citigroup as the Beneficiary		150,478			78,426			3,715			11,191

		Total	$	703,531		$	467,209		$	699,498		$	489,417
		Less: Netting agreements, cash collateral and market value adjustments		(579,050	)		(390,328	)		(573,515	)		(385,876	)

		Net Receivables/Payables	$	124,481		$	76,881		$	125,983		$	103,541

Asset/Liability Management Hedges(3)
	Interest rate contracts		$	6,157		$	8,529		$	9,973		$	7,176
	Foreign exchange contracts			992			1,634			769			972

		Total	$	7,149		$	10,163		$	10,742		$	8,148

(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.
(4): Credit Derivatives are arrangements designed to allow one party (the "beneficiary") to transfer the credit risk of a "reference asset" to another party (the "guarantor"). These arrangements allow a guarantor to assume the credit risk associated with the reference assets without directly purchasing it. The Company has entered into credit derivatives positions for purposes such as risk management, yield enhancement, reduction of credit concentrations, and diversification of overall risk.

Credit Derivatives

The Company makes markets in and trades a range of credit derivatives, both on behalf of clients as well as for its own account. Through these contracts the Company either purchases or writes protection on either a single-name or portfolio basis. The Company uses credit derivatives to help mitigate credit risk in its corporate loan portfolio and other cash positions, to take proprietary trading positions, and to facilitate client transactions.

Credit derivatives generally require that the seller of credit protection make payments to the buyer upon the occurrence of predefined events (settlement triggers). These settlement triggers are defined by the form of the derivative and the referenced credit and are generally limited to the market standard of failure to pay on indebtedness and bankruptcy of the reference credit and, in a more limited range of transactions, debt restructuring. Credit derivative transactions referring to emerging market reference credits will also typically include additional settlement triggers to cover the acceleration of indebtedness and the risk of repudiation or a payment moratorium. In certain transactions on a portfolio of referenced credits or asset-backed securities, the seller of protection may not be required to make payment until a specified amount of losses has occurred with respect to the portfolio and/or may only be required to pay for losses up to a specified amount.

The following tables summarize the key characteristics of the Company's credit derivative portfolio by activity, counterparty and derivative form as of March 31, 2008 and December 31, 2007:

March 31, 2008:

	Market values				Notionals
*In millions of dollars*	Market values				Notionals
*In millions of dollars*	Receivable		Payable		Beneficiary		Guarantor
Credit portfolio	$	63	$	1,462	$	91,909	$	—
Dealer/client		153,840		141,813		1,951,038		1,864,994

Total	$	153,903	$	143,275	$	2,042,947	$	1,864,994

Bank	$	65,458	$	69,937	$	1,115,287	$	1,050,201
Broker-dealer		49,613		49,943		707,879		646,173
Monoline		7,360		113		15,660		961
Non-financial		524		901		11,458		10,390
Insurance and other financial institutions		30,948		22,381		192,663		157,269

Total	$	153,903	$	143,275	$	2,042,947	$	1,864,994

Credit default swaps and options	$	152,973	$	142,527	$	2,021,721	$	1,857,829
Total return swaps and other		930		748		21,226		7,165

Total	$	153,903	$	143,275	$	2,042,947	$	1,864,994

December 31, 2007(1):

	Market values				Notionals
*In millions of dollars*	Market values				Notionals
*In millions of dollars*	Receivable		Payable		Beneficiary		Guarantor
Credit portfolio	$	626	$	129	$	91,228	$	—
Dealer/client		82,767		84,165		1,815,728		1,767,837

Total	$	83,393	$	84,294	$	1,906,956	$	1,767,837

Bank	$	28,571	$	34,425	$	1,035,217	$	970,831
Broker-dealer		28,183		31,519		633,745		585,549
Monoline		5,044		88		15,064		1,243
Non-financial		220		331		3,682		4,253
Insurance and other financial institutions		21,375		17,931		219,248		205,961

Total	$	83,393	$	84,294	$	1,906,956	$	1,767,837

Credit default swaps and options	$	82,752	$	83,015	$	1,891,061	$	1,755,716
Total return swaps and other		641		1,279		15,895		12,121

Total	$	83,393	$	84,294	$	1,906,956	$	1,767,837

(1): Reclassified to conform to current period's presentation.

The market values shown are prior to the application of any netting agreements, cash collateral, and market or credit value adjustments.

The Company actively participates in trading a variety of credit derivatives products as both an active two-way market-maker for clients and to manage credit risk. During 2007, Citigroup and the industry experienced a material increase in trading volumes. The volatility and liquidity challenges in the credit markets during the third and fourth quarters drove derivatives trading volumes as credit derivatives became the instrument of choice for managing credit risk. The majority of this activity was transacted with other financial intermediaries, including both banks and broker-dealers.

During the full year 2007, the total notional amount of protection purchased and sold increased $906 billion and $824 billion, respectively, and by various market participants. The total market value increase of $69 billion for each protection purchased and sold was primarily due to an increase in volume growth of $63 billion and $62 billion, and market spread changes of $6 billion and $7 billion for protection purchased and sold, respectively.

During the first quarter of 2008, the total notional amount of protection purchased and sold increased $136 billion and $97 billion, respectively as volume continued to grow. The corresponding market value increased $71 billion for protection purchased and $59 billion for protection sold. These market value increases were primarily due to an increase in volume growth of $17 billion and $ 8 billion, and changes in market spreads of $54 billion and $51 billion, respectively.

The Company generally has a mismatch between the total notional amounts of protection purchased and sold, and it may hold the reference assets directly rather than entering into offsetting credit derivative contracts as and when desired. The open risk exposures from credit derivative contracts are largely matched after certain cash positions in reference assets are considered and after notional amounts are adjusted, either to a duration-based equivalent basis, or to reflect the level of subordination in tranched structures.

The Company actively monitors its counterparty credit risk in credit derivative contracts. Approximately 84% and 77% of the receivables as of March, 31 2008 and December 31, 2007,

respectively, are from counterparties with which the Company maintains collateral agreements. A majority of the Company's top 15 counterparties (by receivable balance owed to the Company) are banks, financial institutions or other dealers. Contracts with these counterparties do not include ratings-based termination events. However, counterparty rating downgrades may have an incremental effect by lowering the threshold at which the Company may call for additional collateral. A number of the remaining significant counterparties are monolines. See page 24 for a discussion of the Company's exposure to monolines. The master agreements with these monoline insurance counterparties are generally unsecured, and the few ratings-based triggers (if any) generally provide the ability to terminate only upon significant downgrade. As with all derivative contracts, the Company considers counterparty credit risk in the valuation of its positions and recognizes credit valuation adjustments as appropriate. Recent reports and credit agency actions and announcements suggest that ratings downgrades of one or more monoline insurers are being contemplated.

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" section beginning on page 38. 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.

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

The exposures in the following tables do not include Interest Rate Exposures (IREs) for the Nikko Cordial portion of Citigroup's operations in Japan due to the unavailability of information. Nikko Cordial's IRE is primarily denominated in Japanese yen.

	March 31, 2008						December 31, 2007					March 31, 2007
*In millions of dollars*	March 31, 2008						December 31, 2007					March 31, 2007
*In millions of dollars*	Increase			Decrease			Increase			Decrease		Increase			Decrease
U.S. dollar
Instantaneous change	$	(1,423	)	$	1,162		$	(940	)	$	837	$	(677	)	$	470
Gradual change	$	(781	)	$	666		$	(527	)	$	540	$	(335	)	$	348

Mexican peso
Instantaneous change	$	(20	)	$	20		$	(25	)	$	25	$	21		$	(21	)
Gradual change	$	4		$	(4	)	$	(17	)	$	17	$	21		$	(21	)

Euro
Instantaneous change	$	(51	)	$	51		$	(63	)	$	63	$	(123	)	$	123
Gradual change	$	(39	)	$	39		$	(32	)	$	32	$	(57	)	$	57

Japanese yen
Instantaneous change	$	65			NM		$	67			NM	$	(38	)		NM
Gradual change	$	43			NM		$	43			NM	$	(26	)		NM

Pound sterling
Instantaneous change	$	(17	)	$	17		$	(16	)	$	16	$	(22	)	$	22
Gradual change	$	(4	)	$	4		$	(4	)	$	4	$	(11	)	$	11

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, 2007 primarily reflect 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 (in millions of dollars)	$	(149	)	$	(686	)	$	(1,479	)	$	1,169		$	620		$	(108	)

For Citigroup's major trading centers, the aggregate pretax VAR in the trading portfolios was $393 million, $191 million, and $122 million at March 31, 2008, December 31, 2007, and March 31, 2007, respectively. Daily exposures averaged $341 million during the first quarter of 2008 and ranged from $308 million to $393 million.

The following table summarizes VAR to Citigroup in the trading portfolios at March 31, 2008, December 31, 2007, and March 31, 2007, 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, 2008(1)			First Quarter 2008 Average(1)			December 31, 2007			Fourth Quarter 2007 Average			March 31, 2007			First Quarter 2007 Average
Interest rate	$	281		$	283		$	89		$	97		$	99		$	95
Foreign exchange		77			45			28			28			29			28
Equity		235			125			150			129			77			70
Commodity		53			47			45			45			27			28
Covariance adjustment		(253	)		(159	)		(121	)		(130	)		(110	)		(100	)

Total—All market risk factors, including general and specific risk	$	393		$	341		$	191		$	169		$	122		$	121

Specific risk only component	$	39		$	37		$	28		$	29		$	5		$	12

Total—General market factors only	$	354		$	304		$	163		$	140		$	117		$	109

(1): The Sub-Prime Group (SPG) exposures, became fully integrated into VAR during the first quarter of 2008, adding approximately $108 million and $166 million to the March 31, 2008 VAR and first quarter of 2008 average VAR, respectively.

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 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, 2008				December 31, 2007				March 31, 2007
*In millions of dollars*	March 31, 2008				December 31, 2007				March 31, 2007
*In millions of dollars*	Low		High		Low		High		Low		High
Interest rate	$	278	$	293	$	88	$	104	$	71	$	125
Foreign exchange		23		77		23		37		21		35
Equity		58		235		106		164		55		85
Commodity		36		58		33		56		17		34

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 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 the activities of a business are identified and the effectiveness of the key controls over those risks are evaluated and monitored. RCSA processes facilitate Citigroup's adherence to internal control over financial reporting, 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 Audit and Risk Review, and the results of RCSA are included in periodic management reporting, including reporting to senior management and the Audit and Risk Management Committee.

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.

Measurement and Basel II

To support advanced capital modeling and management, the businesses are required to capture relevant operational risk information. 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

Information security and the protection of confidential and sensitive customer data are a priority of Citigroup. The Company has implemented an Information Security Program that complies with the Gramm-Leach-Bliley Act and other regulatory guidance. The Information Security Program is reviewed and enhanced periodically to address emerging threats to customers' information.

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

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

March 31, 2008																	December 31, 2007
Cross-Border Claims on Third Parties
In Billions of U.S. dollars	Banks		Public		Private		Total		Trading and Short- Term Claims		Investments in and Funding of Local Franchises		Total Cross- Border Outstandings		Commitments		Total Cross- Border Outstandings		Commitments
India	$	1.1	$	0.2	$	11.2	$	12.5	$	10.3	$	21.1	$	33.6	$	1.3	$	39.0	$	1.7
Germany		10.9		8.3		10.4		29.6		26.9		—		29.6		40.9		29.3		46.4
France		10.1		3.8		12.9		26.8		25.6		—		26.8		91.6		24.3		107.8
Netherlands		6.9		2.1		15.7		24.7		18.9		—		24.7		16.8		23.1		20.2
United Kingdom		8.4		0.1		13.6		22.1		20.7		—		22.1		478.4		24.7		366.0
South Korea		1.9		0.5		3.1		5.5		5.4		16.8		22.3		20.2		21.9		22.0
Spain		3.3		5.7		8.6		17.6		16.4		3.3		20.9		8.3		21.3		7.4
Italy		2.1		8.8		4.1		15.0		14.3		4.5		19.5		5.6		18.8		5.1

INTEREST REVENUE/EXPENSE AND YIELDS

Average Rates- Interest Revenue, Interest Expense, and Net Interest Margin

*In millions of dollars*		1st Qtr. 2008			4th Qtr. 2007			1st Qtr. 2007			% Change 1Q08 vs. 1Q07
Interest Revenue(1)		$	29,950		$	32,618		$	28,174		6	%
Interest Expense(2)			16,477			19,993			17,562		(6	)

Net Interest Revenue(1)(2)		$	13,473		$	12,625		$	10,612		27	%

Interest Revenue—Average Rate			6.29	%		6.53	%		6.56	%	(27) bps
Interest Expense—Average Rate			3.77	%		4.37	%		4.55	%	(78) bps
Net Interest Margin (NIM)			2.83	%		2.53	%		2.47	%	36 bps

Interest Rate Benchmarks:
Federal Funds Rate—End of Period			2.25	%		4.25	%		5.25	%	(300) bps

2 Year U.S. Treasury Note—Average Rate			2.03	%		3.49	%		4.76	%	(273) bps
10 Year U.S. Treasury Note—Average Rate			3.67	%		4.27	%		4.68	%	(101) bps

	10 Year vs. 2 Year Spread		164 bps			78 bps			(8) bps

(1): Excludes taxable equivalent adjustment (based on the U.S. Federal statutory tax rate of 35%) of $48 million, $31 million, and $15 million for the first quarter of 2008, the fourth quarter of 2007, and the first quarter of 2007, respectively.
(2): Excludes expenses associated with hybrid financial instruments and beneficial interest in consolidated VIEs. These obligations are classified as Long-Term Debt and accounted for at fair value with changes recorded in Principal Transactions.

A significant portion of the Company's business activities are 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 the first quarter of 2008, the significantly lower cost of funding more than offset the lower asset yields, resulting in higher Net interest margin. The widening between the short-term and the long-term spreads as well as the short-term liability sensitive positions contributed to the upward movement of the Net interest margin. On the assets side, the average yield was negatively impacted by the decline in the rates for Fed Funds Sold as well as the shift in the Consumer loan portfolio from higher yielding credit card receivables to lower yielding assets such as mortgages and home equity loans.

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

		Average Volume						Interest Revenue						% Average Rate
*In millions of dollars*		1st Qtr. 2008		4th Qtr. 2007		1st Qtr. 2007		1st Qtr. 2008		4th Qtr. 2007		1st Qtr. 2007		1st Qtr. 2008		4th Qtr. 2007		1st Qtr. 2007
Assets
Deposits with banks(4)		$	65,460	$	63,902	$	45,306	$	805	$	825	$	709	4.95	%	5.12	%	6.35	%

Federal funds sold and securities borrowed or purchased under agreements to resell(5)
In U.S. offices		$	177,420	$	188,647	$	184,069	$	1,746	$	2,630	$	2,879	3.96	%	5.53	%	6.34	%
In offices outside the U.S.(4)			104,895		126,044		109,226		1,426		1,683		1,410	5.47		5.30		5.24

Total		$	282,315	$	314,691	$	293,295	$	3,172	$	4,313	$	4,289	4.52	%	5.44	%	5.93	%

Trading account assets(6)(7)
In U.S. offices		$	254,155	$	273,007	$	236,977	$	3,634	$	3,962	$	2,822	5.75	%	5.76	%	4.83	%
In offices outside the U.S.(4)			180,714		187,482		133,274		1,165		1,074		1,108	2.59		2.27		3.37

Total		$	434,869	$	460,489	$	370,251	$	4,799	$	5,036	$	3,930	4.44	%	4.34	%	4.30	%

Investments(1)
In U.S. offices
	Taxable	$	104,474	$	108,548	$	160,372	$	1,179	$	1,343	$	2,000	4.54	%	4.91	%	5.06	%
	Exempt from U.S. income tax		13,031		16,196		16,810		159		204		190	4.91		5.00		4.58
In offices outside the U.S.(4)			100,866		110,016		107,079		1,361		1,466		1,350	5.43		5.29		5.11

Total		$	218,371	$	234,760	$	284,261	$	2,699	$	3,013	$	3,540	4.97	%	5.09	%	5.05	%

Loans (net of unearned income)(8)
Consumer loans
In U.S. offices		$	398,362	$	397,386	$	362,860	$	7,751	$	8,393	$	7,500	7.83	%	8.38	%	8.38	%
In offices outside the U.S.(4)			199,665		195,815		151,523		5,333		5,087		4,033	10.74		10.31		10.79

Total consumer loans		$	598,027	$	593,201	$	514,383	$	13,084	$	13,480	$	11,533	8.80	%	9.02	%	9.09	%

Corporate loans
In U.S. offices		$	43,423	$	40,266	$	28,685	$	648	$	680	$	503	6.00	%	6.70	%	7.11	%
In offices outside the U.S.(4)			152,934		159,708		136,103		3,409		3,673		2,906	8.97		9.12		8.66

Total corporate loans		$	196,357	$	199,974	$	164,788	$	4,057	$	4,353	$	3,409	8.31	%	8.64	%	8.39	%

Total loans		$	794,384	$	793,175	$	679,171	$	17,141	$	17,833	$	14,942	8.68	%	8.92	%	8.92	%

Other interest-earning Assets		$	119,148	$	114,484	$	68,379	$	1,334	$	1,598	$	764	4.50	%	5.54	%	4.53	%

Total interest-earning Assets		$	1,914,547	$	1,981,501	$	1,740,663	$	29,950	$	32,618	$	28,174	6.29	%	6.53	%	6.56	%

Non-interest-earning assets(6)			410,972		304,299		204,255

Total assets		$	2,325,519	$	2,285,800	$	1,944,918

(1): Interest revenue excludes the taxable equivalent adjustments (based on the U.S. federal statutory tax rate of 35%) of $48 million, $31 million, and $15 million for the first quarter of 2008, the fourth quarter of 2007, and the first quarter of 2007, 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 91.
(3): Monthly or quarterly averages have been used by certain subsidiaries where daily averages are unavailable.
(4): Average rates reflect prevailing local interest rates, including inflationary effects and monetary correction in certain countries.
(5): 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.
(6): The fair value carrying amounts of derivative and foreign exchange contracts are reported in non-interest-earning assets and other non-interest-bearing liabilities.
(7): 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.
(8): 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)

		Average Volume						Interest Expense						% Average Rate
*In millions of dollars*		1st Qtr. 2008		4th Qtr. 2007		1st Qtr. 2007		1st Qtr. 2008		4th Qtr. 2007		1st Qtr. 2007		1st Qtr. 2008		4th Qtr. 2007		1st Qtr. 2007
Liabilities
Deposits
In U. S. offices
	Savings deposits(4)	$	164,945	$	155,703	$	145,259	$	1,040	$	1,203	$	1,170	2.54	%	3.07	%	3.27	%
	Other time deposits		64,792		70,217		54,946		777		1,012		807	4.82		5.72		5.96
In offices outside the U.S.(5)			521,160		532,291		448,074		4,483		5,490		4,581	3.46		4.09		4.15

Total		$	750,897	$	758,211	$	648,279	$	6,300	$	7,705	$	6,558	3.37	%	4.03	%	4.10	%

Federal funds purchased and securities loaned or sold under agreements to repurchase(6)
In U.S. offices		$	209,878	$	233,351	$	237,732	$	2,035	$	3,146	$	3,541	3.90	%	5.35	%	6.04	%
In offices outside the U.S.(5)			120,066		132,501		128,641		1,868		2,056		1,942	6.26		6.16		6.12

Total		$	329,944	$	365,852	$	366,373	$	3,903	$	5,202	$	5,483	4.76	%	5.64	%	6.07	%

Trading account liabilities(7)(8)
In U.S. offices		$	37,713	$	37,012	$	42,319	$	270	$	293	$	235	2.88	%	3.14	%	2.25	%
In offices outside the U.S.(5)			53,432		54,831		45,340		63		89		72	0.47		0.64		0.64

Total		$	91,145	$	91,843	$	87,659	$	333	$	382	$	307	1.47	%	1.65	%	1.42	%

Short-term borrowings
In U.S. offices		$	167,619	$	176,035	$	143,544	$	1,152	$	1,605	$	1,262	2.76	%	3.62	%	3.57	%
In offices outside the U.S.(5)			66,827		71,084		40,835		298		309		202	1.79		1.72		2.01

Total		$	234,446	$	247,119	$	184,379	$	1,450	$	1,914	$	1,464	2.49	%	3.07	%	3.22	%

Long-term debt(9)
In U.S. offices		$	310,984	$	310,132	$	252,833	$	3,988	$	4,212	$	3,385	5.16	%	5.39	%	5.43	%
In offices outside the U.S.(5)			41,866		43,064		27,084		503		578		365	4.83		5.32		5.47

Total		$	352,850	$	353,196	$	279,917	$	4,491	$	4,790	$	3,750	5.12	%	5.38	%	5.43	%

Total interest-bearing liabilities		$	1,759,282	$	1,816,221	$	1,566,607	$	16,477	$	19,993	$	17,562	3.77	%	4.37	%	4.55	%

Demand deposits in U.S. offices			12,960		13,670		11,157
Other non-interest-bearing liabilities(7)			426,171		335,375		247,402

Total liabilities		$	2,198,413	$	2,165,266	$	1,825,166

Total stockholders' equity		$	127,106	$	120,534	$	119,752