Citigroup (C) 10-Q 2007 Q1 Quarterly report

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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 10-Q

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

Commission file number 1-9924

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

Delaware
(State or other jurisdiction of
incorporation or organization) 52-1568099
(I.R.S. Employer
Identification No.)

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

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

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

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

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

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

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

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

Available on the Web at www.citigroup.com

Citigroup Inc.

TABLE OF CONTENTS

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

2

THE COMPANY

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

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

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

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

        Citigroup is managed along the following segment and product lines:

(1)

Disclosure includes Canada and Puerto Rico.

3

CITIGROUP INC. AND SUBSIDIARIES

SUMMARY OF SELECTED FINANCIAL DATA

	Three Months Ended March 31,
In millions of dollars, except per share amounts							% Change
	2007			2006
Net interest revenue	$	10,570		$	9,766		8	%
Non-interest revenue		14,889			12,417		20
Revenues, net of interest expense	$	25,459		$	22,183		15	%
Restructuring expense		1,377			—		—
Other operating expenses		14,194			13,358		6
Provisions for credit losses and for benefits and claims		2,967			1,673		77
Income from continuing operations before taxes and minority interest	$	6,921		$	7,152		(3	)%
Income taxes		1,862			1,537		21
Minority interest, net of taxes		47			60		(22	)
Income from continuing operations	$	5,012		$	5,555		(10	)%
Income from discontinued operations, net of taxes(1)		—			84		NM
Net Income	$	5,012		$	5,639		(11	)%
Earnings per share
Basic:
Income from continuing operations	$	1.02		$	1.13		(10	)%
Net income		1.02			1.14		(11	)
Diluted:
Income from continuing operations		1.01			1.11		(9	)
Net income		1.01			1.12		(10	)
Dividends declared per common share	$	0.54		$	0.49		10
At March 31:
Total assets	$	2,020,966		$	1,586,201		27	%
Total deposits		738,521			627,358		18
Long-term debt		310,768			227,165		37
Mandatorily redeemable securities of subsidiary trusts		9,440			6,166		53
Common stockholders' equity		121,083			113,418		7
Total stockholders' equity		122,083			114,418		7
Ratios:
Return on common stockholders' equity(2)		17.1	%		20.3	%
Return on risk capital(3)		31	%		41	%
Return on invested capital(3)		17	%		20	%
Tier 1 Capital		8.26	%		8.60	%
Total Capital		11.48			11.80
Leverage(4)		4.84			5.22
Common stockholders' equity to assets		5.99	%		7.15	%
Dividends declared(5)		53.5	%		43.8	%
Ratio of earnings to fixed charges and preferred stock dividends		1.39x			1.58x

(1)

Discontinued operations relates to residual items from the Company's sale of Citigroup's Travelers Life & Annuity, which closed during the 2005 third quarter, and the Company's sale of substantially all of its Asset Management Business, which closed during the 2005 fourth quarter. See Note 2 on page 87.

(2)

The return on average common stockholders' equity is calculated using net income after deducting preferred stock dividends.

(3)

Risk capital is a measure of risk levels and the trade-off of risk and return. It is defined as the amount of capital required to absorb potential unexpected economic losses resulting from extremely severe events over a one-year time period. Return on risk capital is calculated as annualized income from continuing operations divided by average risk capital. Invested capital is defined as risk capital plus goodwill and intangible assets excluding mortgage servicing rights (which are a component of risk capital). Return on invested capital is calculated using income adjusted to exclude a net internal charge Citigroup levies on the goodwill and intangible assets of each business offset by each business' share of the rebate of the goodwill and intangible asset charge. Return on risk capital and return on invested capital are non-GAAP performance measures; because they are measures of risk with no basis in GAAP, there is no comparable GAAP measure to which they can be reconciled. Management uses return on risk capital to assess businesses' operational performance and to allocate Citigroup's balance sheet and risk capital capacity. Return on invested capital is used to assess returns on potential acquisitions and to compare long-term performance of businesses with differing proportions of organic and acquired growth. See page 47 for a further discussion of risk capital.

(4)

Tier 1 Capital divided by adjusted average assets.

(5)

Dividends declared per common share as a percentage of net income per diluted share.

NM

Not meaningful

4

MANAGEMENT'S DISCUSSION AND ANALYSIS

MANAGEMENT SUMMARY

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

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

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

*    Excludes Japan Automated Loan Machines (ALMs).

5

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

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

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

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

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

6

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

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

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

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

7

EVENTS IN 2007 AND 2006

Structural Expense Review

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

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

        See Note 7 on page 92 for additional information.

Adoption of SFAS 157—Fair Value Measurements

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

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

        See Note 16 on page 105 for additional information.

Adoption of SFAS 159—Fair Value Option

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

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

       ��See Note 16 on page 105 for additional information.

Sale of MasterCard Shares

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

In millions of dollars	Total
U.S. Cards	$	103
International Cards		42
International Retail Banking		26
Total	$	171

Credit Reserves

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

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

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

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

8

Acquisition of Bisys

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

Tender Offer for Nikko Cordial

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

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

Agreement to Acquire Old Lane Partners, L.P.

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

Acquisition of ABN AMRO Mortgage Group

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

Asia Acquisitions

Acquisition of Bank of Overseas Chinese

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

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

Strategic Investment and Cooperation Agreement with Guangdong Development Bank

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

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

U.K. Market Expansion

Egg

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

Quilter

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

9

Central American Acquisitions

Grupo Cuscatlan

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

Grupo Financiero Uno

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

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

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

EMEA Expansion

Purchase of 20% Equity Interest in Akbank

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

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

Resolution of Federal Tax Audit

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

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

In millions of dollars	Total
Global Consumer	$	290
Markets & Banking		176
Global Wealth Management		13
Alternative Investments		58
Corporate/Other		61
Continuing Operations	$	598
Discontinued Operations		59
Total	$	657

Adoption of the Accounting for Share-Based Payments

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

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

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

In millions of dollars	2006 First Quarter
Global Consumer	$	121
Markets & Banking		354
Global Wealth Management		145
Alternative Investments		7
Corporate/Other		21
Total	$	648

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

10

SEGMENT, PRODUCT AND REGIONAL NET INCOME

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

Citigroup Net Income—Segment and Product View

			First Quarter						% Change
In millions of dollars
			2007			2006(1)			1Q07 vs. 1Q06
Global Consumer
	U.S. Cards		$	897		$	926		(3	)%
	U.S. Retail Distribution			388			515		(25	)
	U.S. Consumer Lending			359			437		(18	)
	U.S. Commercial Business			121			126		(4	)
		Total U.S. Consumer(2)	$	1,765		$	2,004		(12	)%
	International Cards		$	388		$	291		33	%
	International Consumer Finance			25			168		(85	)
	International Retail Banking			540			677		(20	)
		Total International Consumer	$	953		$	1,136		(16	)%
	Other		$	(85	)	$	(67	)	(27	)%
		Total Global Consumer	$	2,633		$	3,073		(14	)%
Markets & Banking
	Securities and Banking		$	2,173		$	1,618		34	%
	Transaction Services			447			323		38
	Other			1			(12	)	NM
		Total Markets & Banking	$	2,621		$	1,929		36	%
Global Wealth Management
	Smith Barney		$	324		$	168		93	%
	Private Bank			124	��		119		4
		Total Global Wealth Management	$	448		$	287		56	%
Alternative Investments			$	222		$	353		(37	)%
Corporate/Other				(912	)		(87	)	NM
Income from Continuing Operations			$	5,012		$	5,555		(10	)%
Income from Discontinued Operations(3)				—			84		NM
Total Net Income			$	5,012		$	5,639		(11	)%

(1)

Reclassified to conform to the current period's presentation. See Note 3 on page 89 for assets by segment.

(2)

U.S. disclosure includes Canada and Puerto Rico.

(3)

See Note 2 on page 87.

NM

Not meaningful

11

Citigroup Net Income—Regional View

			First Quarter						% Change
In millions of dollars
			2007			2006(1)			1Q07 vs. 1Q06
U.S.(2)
	Global Consumer		$	1,680		$	1,937		(13	)%
	Markets & Banking			999			515		94
	Global Wealth Management			361			228		58
		TotalU.S.	$	3,040		$	2,680		13	%
Mexico
	Global Consumer		$	372		$	358		4	%
	Markets & Banking			114			78		46
	Global Wealth Management			12			8		50
		TotalMexico	$	498		$	444		12	%
Latin America
	Global Consumer		$	70		$	58		21	%
	Markets & Banking			218			202		8
	Global Wealth Management			3			3		—
		TotalLatin America	$	291		$	263		11	%
EMEA
	Global Consumer		$	83		$	185		(55	)%
	Markets & Banking			694			635		9
	Global Wealth Management			7			3		NM
		TotalEMEA	$	784		$	823		(5	)%
Japan
	Global Consumer		$	45		$	188		(76	)%
	Markets & Banking			35			85		(59	)
	Global Wealth Management			—			—		—
		TotalJapan	$	80		$	273		(71	)%
Asia
	Global Consumer		$	383		$	347		10	%
	Markets & Banking			561			414		36
	Global Wealth Management			65			45		44
		TotalAsia	$	1,009		$	806		25	%
Alternative Investments			$	222		$	353		(37	)%
Corporate/Other				(912	)		(87	)	NM
Income from Continuing Operations			$	5,012		$	5,555		(10	)%
Income from Discontinued Operations(3)				—			84		NM
Total Net Income			$	5,012		$	5,639		(11	)%
Total International			$	2,662		$	2,609		2	%

(1)

Reclassified to conform to the current period's presentation.

(2)

Excludes Alternative Investments and Corporate/Other, which are predominantly related to theU.S. TheU.S. regional disclosure includes Canada and Puerto Rico. Global Consumer for theU.S. includes Other Consumer.

(3)

See Note 2 on page 87.

NM

Not meaningful.

12

(THIS PAGE INTENTIONALLY LEFT BLANK)

13

GLOBAL CONSUMER

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

	First Quarter						% Change
In millions of dollars	2007			2006			1Q07 vs. 1Q06
Net interest revenue	$	7,644		$	7,224		6	%
Non-interest revenue		5,462			4,731		15
Revenues, net of interest expense	$	13,106		$	11,955		10	%
Operating expenses		6,760			6,357		6
Provisions for loan losses and for benefits and claims		2,686			1,668		61
Income before taxes and minority interest	$	3,660		$	3,930		(7	)%
Income taxes		1,017			847		20
Minority interest, net of taxes		10			10		—
Net income	$	2,633		$	3,073		(14	)%
Average assets(in billions of dollars)	$	709		$	561		26	%
Return on assets		1.51	%		2.22	%
Average risk capital(1)	$	31,653		$	27,714		14	%
Return on risk capital(1)		34	%		45	%
Return on invested capital(1)		17	%		21	%
Key Indicators—(in billions of dollars)
Average managed loans	$	566.0		$	509.0		11	%
Average deposits	$	273.4		$	243.6		12	%
EOP AUMs	$	222.2		$	199.2		12	%
Total branches		8,140			7,440		9	%

(1)

See footnote 3 to the table on page 4.

14

U.S. CONSUMER

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

	First Quarter						% Change
In millions of dollars
	2007			2006			1Q07 vs. 1Q06
Net interest revenue	$	4,185		$	4,138		1	%
Non-interest revenue		3,529			3,122		13
Revenues, net of interest expense	$	7,714		$	7,260		6	%
Operating expenses		3,629			3,569		2
Provisions for loan losses and for benefits and claims		1,470			901		63
Income before taxes and minority interest	$	2,615		$	2,790		(6	)%
Income taxes		842			777		8
Minority interest, net of taxes		8			9		(11	)
Net income	$	1,765		$	2,004		(12	)%
Average assets(in billions of dollars)	$	499		$	379		32	%
Return on assets		1.43	%		2.14	%
Average risk capital(1)	$	17,806		$	15,069		18	%
Return on risk capital(1)		40	%		54	%
Return on invested capital(1)		20	%		24	%
Key Indicators—(in billions of dollars)
Average managed loans	$	440.0		$	400.8		10	%
Average deposits	$	119.2		$	99.1		20	%
EOP AUMs	$	83.3		$	75.0		11	%
Total branches		3,488			3,205		9	%

(1)

See footnote 3 to the table on page 4.

15

U.S. Cards

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

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

	First Quarter						% Change
In millions of dollars
	2007			2006			1Q07 vs. 1Q06
Net interest revenue	$	1,031		$	1,193		(14	)%
Non-interest revenue		2,263			2,041		11
Revenues, net of interest expense	$	3,294		$	3,234		2	%
Operating expenses		1,485			1,532		(3	)
Provision for loan losses and for benefits and claims		416			395		5
Income before taxes and minority interest	$	1,393		$	1,307		7	%
Income taxes and minority interest, net of taxes		496			381		30
Net income	$	897		$	926		(3	)%
Average assets(in billions of dollars)	$	63		$	63		—
Return on assets		5.77	%		5.96	%
Average risk capital(1)	$	5,452		$	5,563		(2	)%
Return on risk capital(1)		67	%		68	%
Return on invested capital(1)		28	%		28	%
Key indicators—on a managed basis: (in billions of dollars)
Return on managed assets		2.37	%		2.59	%
Purchase sales	$	72.4		$	68.4		6	%
Managed average yield(2)		14.22	%		14.16	%
Managed net interest margin(2)		10.11	%		10.48	%

(1)

See footnote 3 to the table on page 4.

(2)

As a percentage of average managed loans.

16

1Q07 vs. 1Q06

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

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

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

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

17

U.S. Retail Distribution

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

		First Quarter						% Change
In millions of dollars		2007			2006			1Q07 vs. 1Q06
Net interest revenue		$	1,529		$	1,451		5	%
Non-interest revenue			897			845		6
Revenues, net of interest expense		$	2,426		$	2,296		6	%
Operating expenses			1,323			1,221		8
Provisions for loan losses and for benefits and claims			522			387		35
Income before taxes		$	581		$	688		(16	)%
Income taxes			193			173		12
Net income		$	388		$	515		(25	)%
Revenues, net of interest expense, by business:
	Citibank branches	$	781		$	737		6	%
	CitiFinancial branches		1,064			1,008		6
	Primerica Financial Services		581			551		5
Total revenues		$	2,426		$	2,296		6	%
Net income by business:
	Citibank branches	$	42		$	100		(58	)%
	CitiFinancial branches		215			265		(19	)
	Primerica Financial Services		131			150		(13	)
Total net income		$	388		$	515		(25	)%
Average assets (in billions of dollars)		$	74		$	66		12	%
Return on assets			2.13	%		3.16	%
Average risk capital(1)		$	3,414		$	3,459		(1	)%
Return on risk capital(1)			46	%		60	%
Return on invested capital(1)			18	%		23	%
Key indicators: (in billions of dollars)
Average loans		$	47.6		$	42.5		12	%
Average deposits		$	98.2		$	80.3		22	%
EOP Investment AUMs		$	83.3		$	75.0		11	%

(1)

See footnote 3 to the table on page 4.

18

1Q07 vs. 1Q06

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

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

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

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

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

19

U.S. Consumer Lending

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

		First Quarter						% Change
In millions of dollars		2007			2006			1Q07 vs. 1Q06
Net interest revenue		$	1,350		$	1,207		12	%
Non-interest revenue			201			53		NM
Revenues, net of interest expense		$	1,551		$	1,260		23	%
Operating expenses			491			453		8
Provisions for loan losses and for benefits and claims			503			143		NM
Income before taxes and minority interest		$	557		$	664		(16	)%
Income taxes			190			218		(13	)
Minority interest, net of taxes			8			9		(11	)
Net income		$	359		$	437		(18	)%
Revenues, net of interest expense, by business:
	Real Estate Lending	$	1,090		$	843		29	%
	Student Loans		112			117		(4	)
	Auto		349			300		16
Total revenues		$	1,551		$	1,260		23	%
Net income by business:
	Real Estate Lending	$	297		$	328		(9	)%
	Student Loans		29			38		(24	)
	Auto		33			71		(54	)
Total net income		$	359		$	437		(18	)%
Average assets (in billions of dollars)		$	313		$	209		50	%
Return on assets			0.47	%		0.85	%
Average risk capital(1)		$	6,256		$	3,732		68	%
Return on risk capital(1)			23	%		47	%
Return on invested capital(1)			16	%		27	%

(1)

See footnote 3 to the table on page 4.

NM

Not meaningful

20

U.S. Consumer Lending (Continued)

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

(2)

As a percentage of average loans.

(3)

Excludes net interest revenue for Mortgage-Backed Securities and Loans held-for-sale.

1Q07 vs. 1Q06

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

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

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

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

21

U.S. Commercial Business

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

	First Quarter						% Change
In millions of dollars
	2007			2006			1Q07 vs. 1Q06
Net interest revenue	$	275		$	287		(4	)%
Non-interest revenue		168			183		(8	)
Revenues, net of interest expense	$	443		$	470		(6	)%
Operating expenses		330			363		(9	)
Provision for loan losses		29			(24	)	NM
Income before taxes	$	84		$	131		(36	)%
Income taxes		(37	)		5		NM
Net income	$	121		$	126		(4	)%
Average assets(in billions of dollars)	$	49		$	41		20	%
Return on assets		1.00	%		1.25	%
Average risk capital(1)	$	2,684		$	2,315		16
Return on risk capital(1)		18	%		22	%
Return on invested capital(1)		10	%		11	%
Key indicators:(in billions of dollars):
Average earning assets	$	38.5		$	35.7		8	%

(1)

See footnote 3 to the table on page 4.

NM

Not meaningful

1Q07 vs. 1Q06

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

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

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

22

INTERNATIONAL CONSUMER

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

		First Quarter						% Change
In millions of dollars
		2007			2006			1Q07 vs. 1Q06
Net interest revenue		$	3,489		$	3,133		11	%
Non-interest revenue			1,899			1,576		20
Revenues, net of interest expense		$	5,388		$	4,709		14	%
Operating expenses			2,976			2,621		14
Provisions for loan losses and for benefits and claims			1,216			767		59
Income before taxes and minority interest		$	1,196		$	1,321		(9	)%
Income taxes			241			184		31
Minority interest, net of taxes			2			1		100
Net income		$	953		$	1,136		(16	)%
Revenues, net of interest expense, by region:
	Mexico	$	1,377		$	1,149		20	%
	Latin America		591			326		81
	EMEA		1,446			1,270		14
	Japan		615			775		(21	)
	Asia		1,359			1,189		14
Total revenues		$	5,388		$	4,709		14	%
Net income by region
	Mexico	$	372		$	358		4	%
	Latin America		70			58		21
	EMEA		83			185		(55	)
	Japan		45			188		(76	)
	Asia		383			347		10
Total net income		$	953		$	1,136		(16	)%
Average assets(in billions of dollars)		$	199		$	173		15	%
Return on assets			1.94	%		2.66	%
Average risk capital(1)		$	13,847		$	12,645		10	%
Return on risk capital(1)			28	%		36	%
Return on invested capital(1)			14	%		18	%
Key indicators—(in billions of dollars)
Average managed loans		$	126.0		$	108.2		16	%
Average deposits		$	154.2		$	144.5		7	%
EOP AUMs		$	138.9		$	124.2		12	%
Total branches			4,652			4,235		10	%

(1)

See footnote 3 to the table on page 4.

23

International Cards

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

		First Quarter						% Change
In millions of dollars		2007			2006			1Q07 vs. 1Q06
Net interest revenue		$	1,121		$	773		45	%
Non-interest revenue			618			507		22
Revenues, net of interest expense		$	1,739		$	1,280		36	%
Operating expenses			819			617		33
Provision for loan losses			406			312		30
Income before taxes and minority interest		$	514		$	351		46	%
Income taxes and minority interest			126			60		NM
Net income		$	388		$	291		33	%
Revenues, net of interest expense, by region:
	Mexico	$	530		$	405		31	%
	Latin America		326			96		NM
	EMEA		375			294		28
	Japan		62			70		(11	)
	Asia		446			415		7
Total revenues		$	1,739		$	1,280		36	%
Net income by region:
	Mexico	$	169		$	149		13	%
	Latin America		66			35		89
	EMEA		46			32		44
	Japan		9			21		(57	)
	Asia		98			54		81
Total net income		$	388		$	291		33	%
Average assets(in billions of dollars)		$	38		$	28		36	%
Return on assets			4.14	%		4.21	%
Average risk capital(1)		$	2,537		$	2,073		22	%
Return on risk capital(1)			62	%		57	%
Return on invested capital(1)			26	%		27	%
Key indicators: (in billions of dollars):
Purchase sales		$	21.7		$	17.4		25	%
Average yield(2)			19.58	%		18.61	%
Net interest margin(2)			14.57	%		12.90	%

(1)

See footnote 3 to the table on page 4.

(2)

As a percentage of average loans.

NM

Not meaningful

24

1Q07 vs. 1Q06

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

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

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

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

Regional Net Income

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

25

International Consumer Finance

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

			First Quarter						% Change
In millions of dollars			2007			2006			1Q07 vs. 1Q06
Net interest revenue			$	838		$	921		(9	)%
Non-interest revenue				52			41		27
Revenues, net of interest expense			$	890		$	962		(7	)%
Operating expenses				407			419		(3	)
Provision for loan losses and for benefits and claims				456			304		50
Income before taxes and minority interest			$	27		$	239		(89	)%
Income taxes				2			71		(97	)
Net income			$	25		$	168		(85	)%
Revenues, net of interest expense, by region:
	Mexico		$	70		$	53		32	%
	EMEA			203			184		10
	Asia (excluding Japan)			140			98		43
	Latin America			43			36		19
		Sub-total	$	456		$	371		23	%
	Japan		$	434		$	591		(27	)%
Total revenues			$	890		$	962		(7	)%
Net income (loss) by region:
	Mexico		$	10		$	10		—
	EMEA			(3	)		7		NM
	Asia (excluding Japan)			13			16		(19	)%
	Latin America			(4	)		—		NM
		Sub-total	$	16		$	33		(52	)%
	Japan		$	9		$	135		(93	)%
Total net income			$	25		$	168		(85	)%
Average assets(in billions of dollars)			$	29		$	26		12	%
Return on assets				0.35	%		2.62	%
Average risk capital(1)			$	1,187		$	1,165		2	%
Return on risk capital(1)				9	%		58	%
Return on invested capital(1)				3	%		19	%

(1)

See footnote 3 to the table on page 4.

NM

Not meaningful

26

International Consumer Finance (Continued)

		First Quarter				% Change
		2007		2006		1Q07 vs. 1Q06
Key indicators:
Average yield(2)		17.08	%	19.06	%
Net interest margin(2)		13.59	%	16.67	%
Number of sales points:
	Other branches	1,618		1,263		28	%
	Japan branches	51		325		(84	)%
	Japan Automated Loan Machines	708		731		(3	)%
Total		2,377		2,319		3	%

(2)

As a percentage of average loans.

1Q07 vs. 1Q06

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

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

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

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

27

International Retail Banking

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

		First Quarter						% Change
In millions of dollars
		2007			2006			1Q07 vs. 1Q06
Net interest revenue		$	1,530		$	1,439		6	%
Non-interest revenue			1,229			1,028		20
Revenues, net of interest expense		$	2,759		$	2,467		12	%
Operating expenses			1,750			1,585		10
Provisions for loan losses and for benefits and claims			354			151		NM
Income before taxes and minority interest		$	655		$	731		(10	)%
Income taxes and minority interest			115			54		NM
Net income		$	540		$	677		(20	)%
Revenues, net of interest expense, by region:
	Mexico	$	777		$	691		12	%
	Latin America		222			194		14
	EMEA		868			792		10
	Japan		119			114		4
	Asia		773			676		14
Total revenues		$	2,759		$	2,467		12	%
Net income by region:
	Mexico	$	193		$	199		(3	)%
	Latin America		8			23		(65	)
	EMEA		40			146		(73	)
	Japan		27			32	��	(16	)
	Asia		272			277		(2	)
Total net income		$	540		$	677		(20	)%
Average assets(in billions of dollars)		$	132		$	119		11	%
Return on assets			1.66	%		2.31	%
Average risk capital(1)		$	10,123		$	9,407		8	%
Return on risk capital(1)			22	%		29	%
Return on invested capital(1)			13	%		15	%

(1)

See footnote 3 to the table on page 4.

NM

Not meaningful

28

International Retail Banking (Continued)

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

1Q07 vs. 1Q06

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

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

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

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

Regional Net Income

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

29

Other Consumer

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

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

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

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

30

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 includesSecurities and Banking,Transaction Services and Other Markets & Banking.

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

(1)

See footnote 3 to the table on page 4.

NM

Not meaningful

31

Securities and Banking

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

		First Quarter						% Change
In millions of dollars
		2007			2006			1Q07 vs. 1Q06
Net interest revenue		$	1,614		$	1,571		3	%
Non-interest revenue			5,699			4,325		32
Revenues, net of interest expense		$	7,313		$	5,896		24	%
Operating expenses			4,059			3,803		7
Provision for credit losses			258			(5	)	NM
Income before taxes and minority interest		$	2,996		$	2,098		43	%
Income taxes			812			461		76
Minority interest, net of taxes			11			19		(42	)
Net income		$	2,173		$	1,618		34	%
Revenues, net of interest expense, by region:
	U.S.	$	3,382		$	2,610		30	%
	Mexico		166			138		20
	Latin America		399			300		33
	EMEA		2,229			1,808		23
	Japan		182			271		(33	)
	Asia		955			769		24
Total revenues		$	7,313		$	5,896		24	%
Net income by region:
	U.S.	$	966		$	515		88	%
	Mexico		91			64		42
	Latin America		161			151		7
	EMEA		546			530		3
	Japan		27			80		(66	)
	Asia		382			278		37
Total net income		$	2,173		$	1,618		34	%
Average risk capital(1)		$	22,701		$	19,123		19	%
Return on risk capital(1)			39	%		34	%
Return on invested capital(1)			30	%		26	%

(1)

See footnote 3 to the table on page 4.

NM

Not meaningful.

32

Securities and Banking (Continued)

					First Quarter						% Change
In millions of dollars					2007			2006			1Q07 vs. 1Q06
Revenue details:
	Investment banking:
		Advisory and other fees			$	429		$	295		45	%
		Equity underwriting				523			286		83
		Debt underwriting				813			713		14
			Gross Investment Banking		$	1,765		$	1,294		36	%
		Revenue allocated to the Global Wealth Management Segment:
			Equity underwriting		$	(136	)	$	(42	)	NM
			Debt underwriting			(34	)		(36	)	6	%
				Total investment banking revenue	$	1,595		$	1,216		31	%
Lending						561			411		36
Equity markets						1,483			1,179		26
Fixed income markets						3,771			3,148		20
Other Securities and Banking(1)						(97	)		(58	)	(67	)
Total Securities and Banking Revenue, net of interest expense(1)					$	7,313		$	5,896		24	%

(1)

Securities and Banking revenues reflect Citigroup's portion (49%) of the results of the Nikko Citigroup Joint Venture on each respective line with an offset in Other Securities & Banking to conform to the GAAP presentation.

NM

Not meaningful

1Q07 vs. 1Q06

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

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

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

Regional Net Income

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

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

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

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

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

33

Transaction Services

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

		First Quarter						% Change
In millions of dollars		2007			2006			1Q07 vs. 1Q06
Net interest revenue		$	838		$	663		26	%
Non-interest revenue			807			719		12
Revenues, net of interest expense		$	1,645		$	1,382		19	%
Operating expenses			1,037			949		9
Provision for credit losses			5			5		—
Income before taxes and minority interest		$	603		$	428		41	%
Income taxes			152			105		45
Minority interest, net of taxes			4			—		NM
Net income		$	447		$	323		38	%
Revenues, net of interest expense, by region:
	U.S.	$	333		$	312		7	%
	Mexico		61			48		27
	Latin America		174			146		19
	EMEA		598			488		23
	Japan		30			25		20
	Asia		449			363		24
Total revenues		$	1,645		$	1,382		19	%
Net income by region:
	U.S.	$	33		$	12		NM
	Mexico		23			14		64	%
	Latin America		54			51		6
	EMEA		150			105		43
	Japan		8			5		60
	Asia		179			136		32
Total net income		$	447		$	323		38	%
Average risk capital(1)		$	1,442		$	1,470		(2	)%
Return on risk capital(1)			126	%		89	%
Return on invested capital(1)			67	%		50	%

(1)

See footnote 3 to the table on page 4.

NM

Not meaningful.

34

Transaction Services (Continued)

	First Quarter				% Change
	2007		2006		1Q07 vs. 1Q06
Key indicators:
Average deposits and other customer liability balances(in billions of dollars)	$	213	$	170	25	%
Assets under custody at year-end(in trillions of dollars)		10.7		8.8	22	%
Revenue details(in millions of dollars):
Cash management	$	981	$	792	24	%
Securities and funds services	$	507	$	438	16	%
Trade services & finance	$	157	$	152	3	%
Total revenue, net of interest expense	$	1,645	$	1,382	19	%

1Q07 vs. 1Q06

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

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

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

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

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

Regional Net Income

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

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

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

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

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

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

35

Other Markets & Banking

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

	First Quarter
In millions of dollars	2007			2006
Net interest revenue		—			—
Non-interest revenue	$	(1	)	$	1
Revenues, net of interest expense	$	(1	)	$	1
Operating expenses		15			5
Income (loss) before income taxes (benefits)	$	(16	)	$	(4	)
Income taxes (benefits)		(17	)		8
Net income (loss)	$	1		$	(12	)

36

GLOBAL WEALTH MANAGEMENT

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

		First Quarter						% Change
In millions of dollars		2007			2006			1Q07 vs. 1Q06
Net interest revenue		$	529		$	460		15	%
Non-interest revenue			2,289			2,023		13
Revenues, net of interest expense		$	2,818		$	2,483		13	%
Operating expenses			2,102			2,055		2
Provision for loan losses			17			5		NM
Income before taxes		$	699		$	423		65	%
Income taxes			251			136		85
Net income		$	448		$	287		56	%
Revenues, net of interest expense by region:
	U.S.	$	2,385		$	2,154		11	%
	Mexico		36			31		16
	Latin America		55			43		28
	EMEA		108			75		44
	Japan		—			—		—
	Asia		234			180		30
Total revenues		$	2,818		$	2,483		13	%
Net income (loss) by region:
	U.S.	$	361		$	228		58	%
	Mexico		12			8		50
	Latin America		3			3		—
	EMEA		7			3		NM
	Japan		—			—		—
	Asia		65			45		44
Total net income		$	448		$	287		56	%
Average risk capital(1)		$	2,879		$	2,539		13	%
Return on risk capital(1)			63	%		46	%
Return on invested capital(1)			40	%		29	%

(1)

See footnote 3 to the table on page 4.

NM

Not meaningful.

37

GLOBAL WEALTH MANAGEMENT (Continued)

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

38

(THIS PAGE INTENTIONALLY LEFT BLANK)

39

Smith Barney

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

		First Quarter						% Change
In millions of dollars		2007			2006			1Q07 vs. 1Q06
Net interest revenue		$	285		$	209		36	%
Non-interest revenue			1,961			1,778		10
Revenues, net of interest expense		$	2,246		$	1,987		13	%
Operating expenses			1,724			1,720		—
Provisions for loan losses			—			1		(100	)
Income before taxes		$	522		$	266		96	%
Income taxes			198			98		NM
Net income		$	324		$	168		93	%
Revenues, net of interest expense by region:
	U.S.	$	2,184		$	1,943		12	%
	Mexico		—			—		—
	Latin America		—			—		—
	EMEA		14			5		NM
	Japan		—			—		—
	Asia		48			39		23
Total revenues		$	2,246		$	1,987		13	%
Net income (loss) by region:
	U.S.	$	318		$	162		96	%
	Mexico		—			—		—
	Latin America		—			—		—
	EMEA		(1	)		1		NM
	Japan		—			—		—
	Asia		7			5		40
Total net income		$	324		$	168		93	%
Average risk capital(1)		$	1,743		$	1,457		20	%
Return on risk capital(1)			75	%		47	%
Return on invested capital(1)			39	%		24	%

(1)

See footnote 3 to the table on page 4.

NM

Not meaningful

40

Smith Barney (Continued)

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

1Q07 vs. 1Q06

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

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

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

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

41

Private Bank

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

		First Quarter						% Change
In millions of dollars		2007			2006			1Q07 vs. 1Q06
Net interest revenue		$	244		$	251		(3	)%
Non-interest revenue			328			245		34
Revenues, net of interest expense		$	572		$	496		15	%
Operating expenses			378			335		13
Provision for loan losses			17			4		NM
Income before taxes		$	177		$	157		13	%
Income taxes			53			38		39
Net income		$	124		$	119		4	%
Revenues, net of interest expense, by region:
	U.S.	$	201		$	211		(4	)%
	Mexico		36			31		16
	Latin America		55			43		28
	EMEA		94			70		34
	Japan		—			—		—
	Asia		186			141		31
Total revenues		$	572		$	496		15	%
Net income by region:
	U.S.	$	43		$	66		(35	)%
	Mexico		12			8		50
	Latin America		3			3		—
	EMEA		8			2		NM
	Japan		—			—		—
	Asia		58			40		45
Total net income		$	124		$	119		4	%
Average risk capital(1)		$	1,136		$	1,082		5	%
Return on risk capital(1)			44	%		45	%
Return on invested capital(1)			40	%		42	%

(1)

See footnote 3 to the table on page 4.

NM

Not meaningful.

42

Private Bank (Continued)

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

1Q07 vs. 1Q06

Revenues, net of interest expense, increased due to strong growth acrossAsia, EMEA, Mexico andLatin America.

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

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

Provision for loan losses increased primarily due to portfolio growth.

        End of period client assets increased $36 billion, or 20%, while average loans increased $6 billion, or 16%, primarily inEMEA and theU.S.

43

ALTERNATIVE INVESTMENTS

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

		First Quarter						% Change
In millions of dollars
		2007			2006			1Q07 vs. 1Q06
Net interest revenue		$	(20	)	$	3		NM
Non-interest revenue			582			672		(13	)%
Total revenues, net of interest expense		$	562		$	675		(17	)%
Net realized and net change in unrealized gains		$	444		$	563		(21	)%
Fees, dividends and interest			35			49		(29	)
Other			(43	)		(28	)	(54	)
Total proprietary investment activities revenues		$	436		$	584		(25	)%
Client revenues(1)			126			91		38
Total revenues, net of interest expense		$	562		$	675		(17	)%
Operating expenses			180			181		(1	)
Provision for loan losses			1			—		NM
Income before taxes and minority interest		$	381		$	494		(23	)%
Income taxes		$	138		$	111		24	%
Minority interest, net of taxes			21			30		(30	)
Net income		$	222		$	353		(37	)%
Average risk capital(2)		$	4,086		$	4,547		(10	)%
Return on risk capital(2)			22	%		32	%
Return on invested capital(2)			19	%		28	%
Revenue by product:
Client(1)		$	126		$	91		38	%
	Private Equity	$	361		$	213		69	%
	Hedge Funds		47			107		(56	)
	Other		28			264		(89	)
Proprietary		$	436		$	584		(25	)%
Total		$	562		$	675		(17	)%

(1)

Includes fee income.

(2)

See footnote 3 to the table on page 4.

NM

Not meaningful.

44

ALTERNATIVE INVESTMENTS (Continued)

		First Quarter				% Change
		2007		2006		1Q07 vs. 1Q06
Key indicators: (in billions of dollars)
Capital under management:
	Client	$	42.9	$	28.2	52	%
	Proprietary		10.8		11.1	(3	)
Total		$	53.7	$	39.3	37	%

1Q07 vs. 1Q06

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

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

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

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

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

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

45

CORPORATE/OTHER

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

	First Quarter
In millions of dollars
	2007			2006
Revenues, net of interest expense	$	16		$	(209	)
Restructuring expense		1,377			—
Other operating expense		41			8
Operating expenses		1,418			8
Loss from continuing operations before taxes and minority interest	$	(1,402	)	$	(217	)
Income tax benefits		(491	)		(131	)
Minority interest, net of taxes		1			1
Loss from continuing operations	$	(912	)	$	(87	)
Income from discontinued operations		—			84
Net loss	$	(912	)	$	(3	)

1Q07 vs. 1Q06

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

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

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

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

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

46

MANAGING GLOBAL RISK

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

        The Citigroup Senior Risk Officer is responsible for:

•

establishing standards for the measurement and reporting of risk,



•

managing and compensating the senior independent risk managers at the business level,



•

approving business-level risk management policies, and



•

reviewing major risk exposures and concentrations across the organization.

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

RISK CAPITAL

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

•

"Economic losses" include losses that appear on the income statement and fair value adjustments to the financial statements, as well as any further declines in value not captured on the income statement.



•

"Unexpected losses" are the difference between potential extremely severe losses and Citigroup's expected (average) loss over a one-year time period.



•

"Extremely severe" is defined as potential loss at a 99.97% confidence level, based on the distribution of observed events and scenario analysis.

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

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

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

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

•

Credit risk losses primarily result from a borrower's or counterparty's inability to meet its obligations.



•

Market risk losses arise from fluctuations in the market value of trading and non-trading positions, including changes in value resulting from fluctuations in rates.



•

Operational risk losses result from inadequate or failed internal processes, people, systems or from external events.

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

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

In billions of dollars	Mar. 31, 2007			Dec. 31, 2006			Mar. 31, 2006
Credit risk	$	38.3		$	36.7		$	36.3
Market risk		29.1			21.5			17.4
Operational risk		7.9			8.0			8.1
Intersector diversification(1)		(6.3	)		(6.4	)		(5.7	)
Total Citigroup	$	69.0		$	59.8		$	56.1
Return on risk capital (quarterly)		31	%		35	%		41	%
Return on invested capital		17	%		17	%		20	%

(1)

Reduction in risk represents diversification between sectors.

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

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

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

47

CREDIT RISK MANAGEMENT PROCESS

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

•

lending



•

sales and trading



•

derivatives



•

securities transactions



•

settlement



•

when the Company acts as an intermediary on behalf of its clients and other third parties.

48

DETAILS OF CREDIT LOSS EXPERIENCE

In millions of dollars		1st Qtr. 2007			4th Qtr. 2006			3rd Qtr. 2006			2nd Qtr. 2006			1st Qtr. 2006
Allowance for loan losses at beginning of period		$	8,940		$	8,979		$	9,144		$	9,505		$	9,782
Provision for loan losses
	Consumer	$	2,443		$	2,028		$	1,736		$	1,426		$	1,446
	Corporate		263			85			57			10			(50	)
		$	2,706		$	2,113		$	1,793		$	1,436		$	1,396
Gross credit losses
Consumer
	In U.S. offices	$	1,291		$	1,223		$	1,091		$	1,090		$	1,105
	In offices outside the U.S.		1,341			1,309			1,227			1,145			1,037
Corporate
	In U.S. offices		6			13			6			44			15
	In offices outside the U.S.		29			97			38			75			26
		$	2,667		$	2,642		$	2,362		$	2,354		$	2,183
Credit recoveries
Consumer
	In U.S. offices	$	214		$	165		$	153		$	183		$	190
	In offices outside the U.S.		286			307			350			298			319
Corporate
	In U.S. offices		18			2			5			12			2
	In offices outside the U.S.		40			26			48			65			72
		$	558		$	500		$	556		$	558		$	583
Net credit losses
	In U.S. offices	$	1,065		$	1,069		$	939		$	939		$	928
	In offices outside the U.S.		1,044			1,073			867			857			672
Total		$	2,109		$	2,142		$	1,806		$	1,796		$	1,600
Other—net(1)(2)(3)(4)(5)		$	(27	)	$	(10	)	$	(152	)	$	(1	)	$	(73	)
Allowance for loan losses at end of period		$	9,510		$	8,940		$	8,979		$	9,144		$	9,505
Allowance for unfunded lending commitments(6)		$	1,100		$	1,100		$	1,100		$	1,050		$	900
Total allowance for loans and unfunded lending commitments		$	10,610		$	10,040		$	10,079		$	10,194		$	10,405
Net consumer credit losses		$	2,132		$	2,060		$	1,815		$	1,754		$	1,633
As a percentage of average consumer loans			1.69	%		1.64	%		1.49	%		1.48	%		1.46	%
Net corporate credit losses/(recoveries)		$	(23	)	$	82		$	(9	)	$	42		$	(33	)
As a percentage of average corporate loans			NM			0.05	%		NM			—			NM

(1)

The first quarter of 2007 includes reductions to the loan loss reserve of $97 million related to a balance sheet reclass to Loans Held for Sale in the U.S. Cards portfolio and the addition of $75 million related to the acquisition of Grupo Financiero Uno.

(2)

The 2006 fourth quarter includes reductions to the loan loss reserve of $74 million related to securitizations.

(3)

The 2006 third quarter includes reductions to the loan loss reserve of $140 million related to securitizations and portfolio sales.

(4)

The 2006 second quarter includes reductions to the loan loss reserve of $125 million related to securitizations, offset by $84 million of additions related to the Credicard acquisition.

(5)

The first quarter of 2006 includes reductions to the loan loss reserve of $90 million related to securitizations.

(6)

Represents additional credit loss reserves for unfunded corporate lending commitments and letters of credit recorded within Other Liabilities on the Consolidated Balance Sheet.

NM

Not meaningful

49

CASH-BASIS, RENEGOTIATED, AND PAST DUE LOANS

In millions of dollars	Mar. 31 2007		Dec. 31, 2006		Sept. 30, 2006		June 30, 2006		Mar. 31, 2006
Corporate cash-basis loans
Collateral dependent (at lower of cost or collateral value)(1)	$	19	$	19	$	15	$	—	$	—
Other		481		516		677		799		821
Total	$	500	$	535	$	692	$	799	$	821
Corporate cash-basis loans
In U.S. offices	$	38	$	58	$	23	$	24	$	65
In offices outside the U.S.		462		477		669		775		756
Total	$	500	$	535	$	692	$	799	$	821
Renegotiated loans (includes Corporate and Commercial Business Loans)	$	26	$	22	$	23	$	23	$	30
Consumer loans on which accrual of interest had been suspended
In U.S. offices	$	2,501	$	2,490	$	2,231	$	1,985	$	2,088
In offices outside the U.S.		2,077		2,022		1,958		1,872		1,664
Total	$	4,578	$	4,512	$	4,189	$	3,857	$	3,752
Accruing loans 90 or more days delinquent(2)
In U.S. offices	$	2,374	$	2,260	$	2,576	$	2,403	$	2,531
In offices outside the U.S.		532		524		448		431		410
Total	$	2,906	$	2,784	$	3,024	$	2,834	$	2,941

(1)

A cash-basis loan is defined as collateral dependent when repayment is expected to be provided solely by the liquidation of the underlying collateral and there are no other available and reliable sources of repayment, in which case the loans are written down to the lower of cost or collateral value.

(2)

Substantially composed of consumer loans of which $2,074 million, $1,891 million, $1,897 million, $1,815 million, and $1,797 million, are government-guaranteed student loans and Federal Housing Authority mortgages at March 31, 2007, December 31, 2006, September 30, 2006, June 30, 2006, and March 31, 2006, respectively.

Other Real Estate Owned and Other Repossessed Assets

In millions of dollars	Mar. 31, 2007		Dec. 31, 2006		Sept. 30, 2006		June 30, 2006		Mar. 31, 2006
Other real estate owned(1)
Consumer	$	461	$	385	$	356	$	324	$	322
Corporate		348		316		193		171		144
Total other real estate owned	$	809	$	701	$	549	$	495	$	466
Other repossessed assets(2)	$	77	$	75	$	62	$	53	$	52

(1)

Represents repossessed real estate, carried at lower of cost or fair value, less costs to sell.

(2)

Primarily transportation equipment, carried at lower of cost or fair value, less costs to sell.

50

CONSUMER PORTFOLIO REVIEW

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

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

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

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

51

Consumer Loan Delinquency Amounts, Net Credit Losses, and Ratios

			Total Loans		90 Days or More Past Due(1)									Average Loans		Net Credit Losses(1)
In millions of dollars, except total and average loan amounts in billions Product View:			Mar. 31, 2007		Mar. 31, 2007			Dec. 31, 2006			Mar. 31, 2006			1st Qtr. 2007		1st Qtr. 2007			4th Qtr. 2006			1st Qtr. 2006
U.S.:
	U.S. Cards		$	35.9	$	587		$	718		$	958		$	38.9	$	439		$	439		$	446
		Ratio				1.63	%		1.61	%		2.39	%				4.58	%		4.30	%		4.27	%
	U.S. Retail Distribution			48.4		847			834			740			47.6		335			337			279
		Ratio				1.75	%		1.73	%		1.73	%				2.85	%		2.88	%		2.66	%
	U.S. Consumer Lending			218.6		3,026			2,870			2,411			216.6		286			258			176
		Ratio				1.38	%		1.36	%		1.25	%				0.53	%		0.49	%		0.38	%
	U.S. Commercial Business			37.6		195			149			151			36.6		19			23			14
		Ratio				0.52	%		0.41	%		0.44	%				0.21	%		0.25	%		0.17	%
International:
	International Cards			32.2		736			709			535			31.2		384			402			218
		Ratio				2.29	%		2.29	%		2.22	%				4.99	%		5.39	%		3.64	%
	International Consumer Finance			25.3		592			608			437			25.0		430			380			319
		Ratio				2.34	%		2.43	%		1.93	%				6.98	%		6.05	%		5.78	%
	International Retail Banking			71.3		630			667			736			69.8		238			221			184
		Ratio				0.88	%		0.97	%		1.21	%				1.38	%		1.29	%		1.21	%
	Private Bank(2)			44.6		10			21			12			43.6		—			—			(4	)
		Ratio				0.02	%		0.05	%		0.03	%				0.00	%		0.00	%		(0.04	)%
Other Consumer Loans				2.7		—			—			43			2.6		1			—			1
On-Balance Sheet in Loans(3)			$	516.6	$	6,623		$	6,576		$	6,023		$	511.9	$	2,132		$	2,060		$	1,633
		Ratio				1.28	%		1.29	%		1.31	%				1.69	%		1.64	%		1.46	%
Securitized receivables (all in U.S. Cards)			$	98.6	$	1,528		$	1,616		$	1,403		$	97.3	$	1,150		$	1,094		$	871
Credit card receivables held-for-sale				3.0		47			—			—			3.0		—			—			4
Managed Loans(4)			$	618.2	$	8,198		$	8,192		$	7,426		$	612.2	$	3,282		$	3,154		$	2,508
		Ratio				1.33	%		1.34	%		1.34	%				2.17	%		2.09	%		1.85	%
Regional View:
U.S.			$	371.5	$	4,663		$	4,584		$	4,312		$	370.2	$	1,080		$	1,058		$	916
	Ratio					1.26	%		1.24	%		1.27	%				1.18	%		1.16	%		1.11	%
Mexico				16.9		507			625			541			16.5		182			163			106
	Ratio					3.00	%		3.78	%		3.68	%				4.47	%		3.97	%		2.87	%
EMEA				45.7		582			574			487			44.4		317			303			250
	Ratio					1.27	%		1.32	%		1.32	%				2.89	%		2.84	%		2.77	%
Japan				10.9		227			235			170			11.0		313			273			223
	Ratio					2.08	%		2.08	%		1.48	%				11.57	%		9.43	%		7.83	%
Asia				63.7		432			439			473			62.7		164			186			136
	Ratio					0.68	%		0.71	%		0.87	%				1.06	%		1.22	%		1.01	%
Latin America				7.9		212			119			40			7.1		76			77			2
	Ratio					2.69	%		1.84	%		0.99	%				4.36	%		4.98	%		0.21	%
On-Balance Sheet in Loans(3)			$	516.6	$	6,623		$	6,576		$	6,023		$	511.9	$	2,132		$	2,060		$	1,633
	Ratio					1.28	%		1.29	%		1.31	%				1.69	%		1.64	%		1.46	%
Securitized receivables (all in U.S. Cards)			$	98.6	$	1,528		$	1,616		$	1,403		$	97.3	$	1,150		$	1,094		$	871
Credit card receivables held-for-sale				3.0		47			—			—			3.0		—			—			4
Managed Loans(4)			$	618.2	$	8,198		$	8,192		$	7,426		$	612.2	$	3,282		$	3,154		$	2,508
	Ratio					1.33	%		1.34	%		1.34	%				2.17	%		2.09	%		1.85	%

(1)

The ratios of 90 days or more past due and net credit losses are calculated based on end-of-period and average loans, respectively, both net of unearned income.

(2)

Private Bank results are reported as part of the Global Wealth Management segment.

(3)

Total loans and total average loans exclude certain interest and fees on credit cards of approximately $2 billion and $2 billion, respectively, which are included in Consumer Loans on the Consolidated Balance Sheet.

(4)

This table presents credit information on a held basis and shows the impact of securitizations to reconcile to a managed basis. OnlyU.S. Cards from a product view, and U.S from a regional view, are impacted. Managed-basis reporting is a non-GAAP measure. Held-basis reporting is the related GAAP measure. See a discussion of managed-basis reporting on page 51.

52

Consumer Loan Balances, Net of Unearned Income

	End of Period						Average
In billions of dollars	Mar. 31, 2007		Dec. 31, 2006		Mar. 31, 2006		1st Qtr. 2007		4th Qtr 2006		1st Qtr. 2006
On-balance sheet(1)	$	516.6	$	510.8	$	459.4	$	511.9	$	498.0	$	454.8
Securitized receivables (all inU.S. Cards)		98.6		99.5		95.9		97.3		99.1		94.7
Credit card receivables held-for-sale(2)		3.0		—		—		3.0		0.2		0.3
Total managed(3)	$	618.2	$	610.3	$	555.3	$	612.2	$	597.3	$	549.8

(1)

Total loans and total average loans exclude certain interest and fees on credit cards of approximately $2 billion and $2 billion for the first quarter of 2007, approximately $2 billion and $2 billion for the fourth quarter of 2006, and approximately $3 billion and $4 billion for the first quarter of 2006, respectively, which are included in Consumer Loans on the Consolidated Balance Sheet.

(2)

Included in Other Assets on the Consolidated Balance Sheet.

(3)

This table presents loan information on a held basis and shows the impact of securitization to reconcile to a managed basis. Managed-basis reporting is a non-GAAP measure. Held-basis reporting is the related GAAP measure. See a discussion of managed-basis reporting on page 51.

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

•

reserve releases, primarily related to a decline in bankruptcy filings due to the impact of the change in bankruptcy legislation onU.S. Cards in 2005, and stable credit conditions in the U.S. and internationally;



•

$339 million of reductions related to securitizations and sales of portfolios in theU.S. Cards business;



•

a $97 million balance sheet reclass to loans held for sale in theU.S. Cards business;

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

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

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

53

CORPORATE CREDIT RISK

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

•

joint business and independent risk management responsibility for managing credit risks;



•

single center of control for each credit relationship that coordinates credit activities with that client;



•

portfolio limits to ensure diversification and maintain risk/capital alignment;



•

a minimum of two-authorized credit officer-signatures are required on extensions of credit—(one from a sponsoring credit officer in the business and one from a credit officer in independent credit risk management);



•

risk rating standards, applicable to every obligor and facility; and



•

consistent standards for credit origination documentation and remedial management.

Credit Exposure Arising from Derivatives and Foreign Exchange

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

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

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

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

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

54

CITIGROUP DERIVATIVES

Notionals(1)

		Trading Derivatives(2)				Asset/Liability Management Hedges(3)
In millions of dollars		March 31, 2007		December 31, 2006		March 31, 2007		December 31, 2006
Interest rate contracts
	Swaps	$	15,127,660	$	14,196,404	$	584,647	$	561,376
	Futures and forwards		2,115,956		1,824,205		132,102		75,374
	Written options		4,018,792		3,054,990		31,078		12,764
	Purchased options		3,986,488		2,953,122		62,645		35,420
Total interest rate contract notionals		$	25,248,896	$	22,028,721	$	810,472	$	684,934
Foreign exchange contracts
	Swaps	$	770,255	$	722,063	$	60,181	$	53,216
	Futures and forwards		2,271,735		2,068,310		41,955		42,675
	Written options		482,675		416,951		886		1,228
	Purchased options		458,963		404,859		761		1,246
Total foreign exchange contract notionals		$	3,983,628	$	3,612,183	$	103,783	$	98,365
Equity contracts
	Swaps	$	127,252	$	104,320	$	—	$	—
	Futures and forwards		26,921		36,362		—		—
	Written options		584,088		387,781		—		—
	Purchased options		541,841		355,891		—		—
Total equity contract notionals		$	1,280,102	$	884,354	$	—	$	—
Commodity and other contracts
	Swaps	$	41,146	$	35,611	$	—	$	—
	Futures and forwards		45,005		17,433		—		—
	Written options		15,407		11,991		—		—
	Purchased options		16,869		16,904		—		—
Total commodity and other contract notionals		$	118,427	$	81,939	$	—	$	—
Credit derivatives		$	2,467,859	$	1,944,980	$	—	$	—
Total derivative notionals		$	33,098,912	$	28,552,177	$	914,255	$	783,299

Mark-to-Market (MTM) Receivables/Payables

			Derivatives Receivables—MTM						Derivatives Payables—MTM
In millions of dollars			March 31, 2007			December 31, 2006			March 31, 2007			December 31, 2006
Trading Derivatives(2)
	Interest rate contracts		$	171,536		$	167,521		$	174,217		$	166,119
	Foreign exchange contracts			45,871			52,297			41,430			47,469
	Equity contracts			28,281			26,883			53,154			52,980
	Commodity and other contracts			5,216			5,387			5,462			5,776
	Credit derivative			20,078			14,069			20,621			15,081
		Total	$	270,982		$	266,157		$	294,884		$	287,425
		Less: Netting agreements, cash collateral and market value adjustments		(224,516	)		(216,616	)		(220,693	)		(212,621	)
		Net Receivables/Payables	$	46,466		$	49,541		$	74,191		$	74,804
Asset/Liability Management Hedges(3)
	Interest rate contracts		$	1,837		$	1,801		$	4,816		$	3,327
	Foreign exchange contracts			3,861			3,660			681			947
		Total	$	5,698		$	5,461		$	5,497		$	4,274

(1)

Includes the notional amounts for long and short derivative positions.

(2)

Trading Derivatives include proprietary positions, as well as hedging derivatives instruments that do not qualify for hedge accounting in accordance with SFAS No. 133,"Accounting for Derivative Instruments and Hedging Activities"(SFAS 133).

(3)

Asset/Liability Management Hedges include only those end-user derivative instruments where the changes in market value are recorded to other assets or other liabilities.

55

GLOBAL CORPORATE PORTFOLIO REVIEW

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

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

In millions of dollars	Mar. 31, 2007			Dec. 31, 2006			Mar. 31, 2006
Corporate cash-basis loans
Securities and Banking	$	474		$	500		$	745
Transaction Services		26			35			76
Total corporate cash-basis loans(1)	$	500		$	535		$	821
Net credit losses (recoveries)
Securities and Banking	$	(28	)	$	70		$	(34	)
Transaction Services		5			6			1
Alternative Investments		1			—			—
Corporate/Other		(1	)		6			—
Total net credit losses (recoveries)	$	(23	)	$	82		$	(33	)
Corporate allowance for loan losses	$	3,172		$	2,934		$	2,858
Corporate allowance for credit losses on unfunded lending commitments(2)		1,100			1,100			900
Total corporate allowance for loans and unfunded lending commitments	$	4,272		$	4,034		$	3,758
As a percentage of total corporate loans(3)		1.82	%		1.76	%		2.00	%

(1)

Excludes purchased distressed loans accounted for in accordance with SOP 03-3. The carrying value of these loans was $957 million at March 31, 2007, $949 million at December 31, 2006 and $1,217 million at March 31, 2006.

(2)

Represents additional reserves recorded in Other Liabilities on the Consolidated Balance Sheet.

(3)

Does not include the allowance for unfunded lending commitments.

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

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

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

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

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

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

56

MARKET RISK MANAGEMENT PROCESS

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

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

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

Non-Trading Portfolios

Interest Rate Risk

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

•

At any given time, there may be an unequal amount of assets and liabilities, which are subject to market rates due to maturation or repricing. Whenever the amount of liabilities subject to repricing exceeds the amount of assets subject to repricing, a company is considered "liability sensitive." In this case, a company's NIR will deteriorate in a rising rate environment.



•

The assets and liabilities of a company may reprice at different speeds or mature at different times, subjecting both "liability sensitive" and "asset sensitive" companies to NIR sensitivity from changing interest rates. For example, a company may have a large amount of loans that are subject to repricing this period, but the majority of deposits are not scheduled for repricing until the following period. That company would suffer from NIR deterioration if interest rates were to fall.

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

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

Interest Rate Risk Governance

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

Interest Rate Risk Measurement

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

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

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

Mitigation and Hedging of Risk

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

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

57

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

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

	March 31, 2007						December 31, 2006						March 31, 2006
In millions of dollars	Increase			Decrease			Increase			Decrease			Increase			Decrease
U.S. dollar
Instantaneous change	$	(677	)	$	470		$	(728	)	$	627		$	(435	)	$	585
Gradual change	$	(335	)	$	348		$	(349	)	$	360		$	(266	)	$	271
Mexican peso
Instantaneous change	$	21		$	(21	)	$	42		$	(43	)	$	91		$	(92	)
Gradual change	$	21		$	(21	)	$	41		$	(41	)	$	63		$	(63	)
Euro
Instantaneous change	$	(123	)	$	123		$	(91	)	$	91		$	(56	)	$	56
Gradual change	$	(57	)	$	57		$	(38	)	$	38		$	(15	)	$	15
Japanese yen
Instantaneous change	$	(38	)		NM		$	(32	)		NM		$	(5	)		NM
Gradual change	$	(26	)		NM		$	(21	)		NM		$	5			NM
Pound sterling
Instantaneous change	$	(22	)	$	22		$	(41	)	$	41		$	(22	)	$	21
Gradual change	$	(11	)	$	11		$	(21	)	$	21		$	5		$	(5	)

NM

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

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

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

	Scenario 1			Scenario 2			Scenario 3			Scenario 4			Scenario 5			Scenario 6
Overnight rate change (bp)		—			100			200			(200	)		(100	)		—
10-year rate change (bp)		(100	)		—			100			(100	)		—			100
Impact to net interest revenue	$	29		$	(380	)	$	(851	)	$	649		$	383		$	(252	)
(in millions of dollars)

Trading Portfolios

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

•

factor sensitivities;



•

Value-at-Risk (VAR); and



•

stress testing.

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

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

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

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

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

        Total revenues of the trading business consist of:

•

Customer revenue, which includes spreads from customer flow and positions taken to facilitate customer orders;



•

Proprietary trading activities in both cash and derivative transactions; and



•

Net interest revenue.

58

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

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

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

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

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

In million of dollars	March 31, 2007			First Quarter 2007 Average			December 31, 2006			Fourth Quarter 2006 Average			March 31, 2006			First Quarter 2006 Average
Interest rate	$	99		$	95		$	81		$	79		$	95		$	86
Foreign exchange		29			28			27			30			29			23
Equity		77			70			62			51			43			48
Commodity		27			28			18			15			15			12
Covariance adjustment		(110	)		(100	)		(82	)		(79	)		(76	)		(67	)
Total — All market risk factors, including general and specific risk	$	122		$	121		$	106		$	96		$	106		$	102
Specific risk only component	$	5		$	12		$	8		$	12		$	10		$	11
Total — General market factors only	$	117		$	109		$	98		$	84		$	96		$	91

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

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

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

59

OPERATIONAL RISK MANAGEMENT PROCESS

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

•

Recognized ownership of the risk by the businesses;



•

Oversight by independent risk management; and



•

Independent review by Audit and Risk Review (ARR).

Framework

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

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

•

Identify and assess Key Operational Risks;



•

Establish Key Risk Indicators; and



•

Produce a comprehensive operational risk report.

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

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

Measurement and Basel II

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

Information Security and Continuity of Business

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

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

60

COUNTRY AND CROSS-BORDER RISK MANAGEMENT PROCESS

Country Risk

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

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

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

Cross-Border Risk

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

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

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

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

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

61

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

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

(1)

Included in total cross-border claims on third parties.

(2)

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

62

INTEREST REVENUE/EXPENSE AND YIELDS

In millions of dollars		1st Qtr. 2007			4th Qtr. 2006(1)			1st Qtr. 2006			% Change 1Q07 vs. 1Q06
Interest Revenue(2)		$	28,132		$	26,257		$	21,873		29	%
Interest Expense			17,562			16,218			12,107		45
Net Interest Revenue(2)		$	10,570		$	10,039		$	9,766		8	%
Interest Revenue—Average Rate			6.55	%		6.42	%		6.38	%	17 bps
Interest Expense—Average Rate			4.50	%		4.39	%		3.94	%	56 bps
Net Interest Margin (NIM)			2.46	%		2.45	%		2.85	%	(39) bps
Interest Rate Benchmarks:
Federal Funds Rate—End of Period			5.25	%		5.25	%		4.75	%	50 bps
2 Year U.S. Treasury Note—Average Rate			4.76	%		4.74	%		4.60	%	16 bps
10 Year U.S. Treasury Note—Average Rate			4.68	%		4.63	%		4.57	%	11 bps
	10 Year vs. 2 Year Spread		(8) bps			(11) bps			(3) bps

(1)

The 2006 fourth quarter includes a ($666) million reduction of interest revenue related to the change in consumer lending laws in Japan. This impacted the average rate on average interest-earning assets by 16 basis points and the net interest margin by 17 basis points.

(2)

Excludes taxable equivalent adjustment (based on the U.S. Federal statutory tax rate of 35%) of $15 million, $30 million, and $29 million for the first quarter of 2007, the fourth quarter of 2006, and the first quarter of 2006, respectively.

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

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

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

63

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

		Average Volume						Interest Revenue						% Average Rate
In millions of dollars		1st Qtr. 2007		4th Qtr. 2006		1st Qtr. 2006		1st Qtr. 2007		4th Qtr. 2006		1st Qtr. 2006		1st Qtr. 2007		4th Qtr. 2006		1st Qtr. 2006
Assets
Deposits with banks(5)		$	45,306	$	40,598	$	34,851	$	709	$	693	$	489	6.35	%	6.77	%	5.69	%
Federal funds sold and securities borrowed or purchased under agreements to resell(6)
In U.S. offices		$	184,069	$	175,679	$	159,327	$	2,879	$	2,735	$	2,355	6.34	%	6.18	%	5.99	%
In offices outside the U.S.(5)			109,226		90,138		81,709		1,410		1,149		850	5.24		5.06		4.22
Total		$	293,295	$	265,817	$	241,036	$	4,289	$	3,884	$	3,205	5.93	%	5.80	%	5.39	%
Trading account assets(7) (8)
In U.S. offices		$	236,977	$	213,644	$	176,782	$	2,822	$	2,518	$	1,886	4.83	%	4.68	%	4.33	%
In offices outside the U.S.(5)			133,274		113,730		88,967		1,108		850		814	3.37		2.97		3.71
Total		$	370,251	$	327,374	$	265,749	$	3,930	$	3,368	$	2,700	4.30	%	4.08	%	4.12	%
Investments(1)
In U.S. offices
	Taxable	$	160,372	$	148,601	$	84,938	$	2,000	$	1,965	$	784	5.06	%	5.25	%	3.74	%
	Exempt from U.S. income tax		16,810		14,229		14,108		190		173		153	4.58		4.82		4.40
In offices outside the U.S.(5)			107,079		103,993		92,431		1,350		1,344		1,119	5.11		5.13		4.91
Total		$	284,261	$	266,823	$	191,477	$	3,540	$	3,482	$	2,056	5.05	%	5.18	%	4.35	%
Loans (net of unearned income)(9)
Consumer loans
In U.S. offices		$	362,860	$	353,174	$	327,026	$	7,458	$	7,475	$	6,662	8.34	%	8.40	%	8.26	%
In offices outside the U.S.(5)			151,523		147,304		131,365		4,033		3,379		3,690	10.79		9.10		11.39
Total consumer loans		$	514,383	$	500,478	$	458,391	$	11,491	$	10,854	$	10,352	9.06	%	8.60	%	9.16	%
Corporate loans
In U.S. offices		$	28,685	$	30,928	$	27,181	$	538	$	542	$	431	7.61	%	6.95	%	6.43	%
In offices outside the U.S.(5)			136,103		132,729		111,961		2,906		2,775		2,035	8.66		8.29		7.37
Total corporate loans		$	164,788	$	163,657	$	139,142	$	3,444	$	3,317	$	2,466	8.48	%	8.04	%	7.19	%
Total loans		$	679,171	$	664,135	$	597,533	$	14,935	$	14,171	$	12,818	8.92	%	8.47	%	8.70	%
Other interest-earning assets		$	68,379	$	58,881	$	59,208	$	729	$	659	$	605	4.32	%	4.44	%	4.14	%
Total interest-earning assets		$	1,740,663	$	1,623,628	$	1,389,854	$	28,132	$	26,257	$	21,873	6.55	%	6.42	%	6.38	%
Non-interest-earning assets(7)			204,255		193,135		182,280
Total assets from discontinued operations			—		—		—
Total assets		$	1,944,918	$	1,816,763	$	1,572,134

(1)

Interest revenue excludes the taxable equivalent adjustments (based on the U.S. federal statutory tax rate of 35%) of $15 million, $30 million, and $29 million for the first quarter of 2007, the fourth quarter of 2006, and the first quarter of 2006, respectively.

(2)

Interest rates and amounts include the effects of risk management activities associated with the respective asset and liability categories. See Note 15 on page 102.

(3)

Monthly or quarterly averages have been used by certain subsidiaries where daily averages are unavailable.

(4)

Detailed average volume, interest revenue and interest expense exclude discontinued operations. See Note 2 on page 87.

(5)

Average rates reflect prevailing local interest rates, including inflationary effects and monetary correction in certain countries.

(6)

Average volumes of securities borrowed or purchased under agreements to resell are reported net pursuant to FIN 41 and interest revenue excludes the impact of FIN 41.

(7)

The fair value carrying amounts of derivative and foreign exchange contracts are reported in non-interest-earning assets and other non-interest bearing liabilities.

(8)

Interest expense on trading account liabilities of Markets & Banking is reported as a reduction of interest revenue. Interest revenue and interest expense on cash collateral positions are reported in trading account assets and trading account liabilities, respectively.

(9)

Includes cash-basis loans.

Reclassified to conform to the current period's presentation.

64

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

		Average Volume						Interest Expense						% Average Rate
In millions of dollars		1st Qtr. 2007		4th Qtr. 2006		1st Qtr. 2006		1st Qtr. 2007		4th Qtr. 2006		1st Qtr. 2006		1st Qtr. 2007		4th Qtr. 2006		1st Qtr. 2006
Liabilities
Deposits
In U. S. offices
	Savings deposits(5)	$	145,259	$	138,332	$	132,268	$	1,170	$	1,094	$	868	3.27	%	3.14	%	2.66	%
Other time deposits			54,946		55,374		42,410		807		715		499	5.96		5.12		4.77
In offices outside the U.S.(6)			448,074		433,273		370,421		4,581		4,368		3,138	4.15		4.00		3.44
Total		$	648,279	$	626,979	$	545,099	$	6,558	$	6,177	$	4,505	4.10	%	3.91	%	3.35	%
Federal funds purchased and securities loaned or sold under agreements to repurchase(7)
In U.S. offices		$	237,732	$	218,357	$	185,147	$	3,541	$	3,234	$	2,676	6.04	%	5.88	%	5.86	%
In offices outside the U.S.(6)			128,641		105,222		88,086		1,942		1,600		1,223	6.12		6.03		5.63
Total		$	366,373	$	323,579	$	273,233	$	5,483	$	4,834	$	3,899	6.07	%	5.93	%	5.79	%
Trading account liabilities(8) (9)
In U.S. offices		$	42,319	$	39,557	$	35,270	$	235	$	229	$	192	2.25	%	2.30	%	2.21	%
In offices outside the U.S. (6)			45,340		39,716		36,485		72		65		51	0.64		0.65		0.57
Total		$	87,659	$	79,273	$	71,755	$	307	$	294	$	243	1.42	%	1.47	%	1.37	%
Short-term borrowings
In U.S. offices		$	143,544	$	126,950	$	113,351	$	1,262	$	1,283	$	765	3.57	%	4.01	%	2.74	%
In offices outside the U.S. (6)			40,835		32,238		18,179		202		159		200	2.01		1.96		4.46
Total		$	184,379	$	159,188	$	131,530	$	1,464	$	1,442	$	965	3.22	%	3.59	%	2.98	%
Long-term debt
In U.S. offices		$	263,894	$	244,445	$	195,640	$	3,385	$	3,129	$	2,189	5.20	%	5.08	%	4.54	%
In offices outside the U.S. (6)			32,591		30,630		29,546		365		342		306	4.54		4.43		4.20
Total		$	296,485	$	275,075	$	225,186	$	3,750	$	3,471	$	2,495	5.13	%	5.01	%	4.49	%
Total interest-bearing liabilities		$	1,583,175	$	1,464,094	$	1,246,803	$	17,562	$	16,218	$	12,107	4.50	%	4.39	%	3.94	%
Demand deposits in U.S. offices			11,157		10,979		10,044
Other non-interest bearing liabilities(8)			230,834		223,051		202,164
Total liabilities from discontinued operations			—		—		—
Total liabilities		$	1,825,166	$	1,698,124	$	1,459,011
Total stockholders' equity(10)		$	119,752	$	118,639	$	113,123
Total liabilities and stockholders' equity		$	1,944,918	$	1,816,763	$	1,572,134
Net interest revenue as a percentage of average interest-earning assets(11)
In U.S. offices		$	1,049,574	$	987,247	$	837,085	$	4,976	$	5,219	$	4,940	1.92	%	2.10	%	2.39	%
In offices outside the U.S.(6)			691,089		636,381		552,769		5,594		4,820		4,826	3.28		3.00		3.54
Total		$	1,740,663	$	1,623,628	$	1,389,854	$	10,570	$	10,039	$	9,766	2.46	%	2.45	%	2.85	%

(1)

Interest revenue excludes the taxable equivalent adjustments (based on the U.S. federal statutory tax rate of 35%) of $15 million, $30 million, and $29 million for the first quarter of 2007, the fourth quarter of 2006, and the first quarter of 2006, respectively.

(2)

Interest rates and amounts include the effects of risk management activities associated with the respective asset and liability categories. See Note 15 on page 102.

(3)

Monthly or quarterly averages have been used by certain subsidiaries where daily averages are unavailable.

(4)

Detailed average volume, interest revenue and interest expense exclude discontinued operations. See Note 2 on page 87.

(5)

Savings deposits consist of Insured Money Market Rate accounts, NOW accounts, and other savings deposits.

(6)

Average rates reflect prevailing local interest rates, including inflationary effects and monetary corrections in certain countries.

(7)

Average volumes of securities loaned or sold under agreements to repurchase are reported net pursuant to FIN 41 and interest expense excludes the impact of FIN 41.

(8)

The fair value carrying amounts of derivative and foreign exchange contracts are reported in non-interest-earning assets and other non-interest bearing liabilities.

(9)

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.

(10)

Includes stockholders' equity from discontinued operations.

(11)

Includes allocations for capital and funding costs based on the location of the asset.

        Reclassified to conform to the current period's presentation.

65

ANALYSIS OF CHANGES IN INTEREST REVENUE(1)(2)(3)

	1st Qtr. 2007 vs. 4th Qtr. 2006									1st Qtr. 2007 vs. 1st Qtr. 2006
	Increase (Decrease) Due to Change in:									Increase (Decrease) Due to Change in:
In millions of dollars	Average Volume			Average Rate			Net Change(2)			Average Volume		Average Rate			Net Change(2)
Deposits with banks(4)	$	76		$	(60	)	$	16		$	159	$	61		$	220
Federal funds sold and securities borrowed or purchased under agreements to resell
In U.S. offices	$	131		$	13		$	144		$	381	$	143		$	524
In offices outside the U.S.(4)		246			15			261			326		234			560
Total	$	377		$	28		$	405		$	707	$	377		$	1,084
Trading account assets(5)
In U.S. offices	$	278		$	26		$	304		$	698	$	238		$	936
In offices outside the U.S.(4)		156			102			258			374		(80	)		294
Total	$	434		$	128		$	562		$	1,072	$	158		$	1,230
Investments(1)
In U.S. offices	$	182		$	(130	)	$	52		$	902	$	351		$	1,253
In offices outside the U.S.(4)		39			(33	)		6			184		47			231
Total	$	221		$	(163	)	$	58		$	1,086	$	398		$	1,484
Loans—consumer
In U.S. offices	$	202		$	(219	)	$	(17	)	$	736	$	60		$	796
In offices outside the U.S.(4)		99			555			654			544		(201	)		343
Total	$	301		$	336		$	637		$	1,280	$	(141	)	$	1,139
Loans—corporate
In U.S. offices	$	(41	)	$	37		$	(4	)	$	25	$	82		$	107
In offices outside the U.S.(4)		72			59			131			481		390			871
Total	$	31		$	96		$	127		$	506	$	472		$	978
Total loans	$	332		$	432		$	764		$	1,786	$	331		$	2,117
Other interest-earning assets	$	102		$	(32	)	$	70		$	97	$	27		$	124
Total interest revenue	$	1,542		$	333		$	1,875		$	4,907	$	1,352		$	6,259

(1)

The taxable equivalent adjustment is based on the U.S. Federal statutory tax rate of 35%, and is excluded from this presentation.

(2)

Rate/volume variance is allocated based on the percentage relationship of changes in volume and changes in rate to the total net change.

(3)

Detailed average volume, interest revenue and interest expense exclude discontinued operations. See Note 2 on page 87.

(4)

Changes in average rates reflect changes in prevailing local interest rates, including inflationary effects and monetary corrections in certain countries.

(5)

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.

66

ANALYSIS OF CHANGES IN INTEREST EXPENSE AND NET INTEREST REVENUE(1)(2)(3)

	1st Qtr. 2007 vs. 4th Qtr. 2006								1st Qtr. 2007 vs. 1st Qtr. 2006
	Increase (Decrease) Due to Change in:								Increase (Decrease) Due to Change in:
In millions of dollars	Average Volume		Average Rate			Net Change(2)			Average Volume		Average Rate			Net Change(2)
Deposits
In U.S. offices	$	62	$	106		$	168		$	219	$	391		$	610
In offices outside the U.S.(4)		151		62			213			726		717			1,443
Total	$	213	$	168		$	381		$	945	$	1,108		$	2,053
Federal funds purchased and securities loaned or sold under agreements to repurchase
In U.S. offices	$	288	$	19		$	307		$	781	$	84		$	865
In offices outside the U.S.(4)		354		(12	)		342			604		115			719
Total	$	642	$	7		$	649		$	1,385	$	199		$	1,584
Trading account liabilities(5)
In U.S. offices	$	16	$	(10	)	$	6		$	39	$	4		$	43
In offices outside the U.S.(4)		9		(2	)		7			14		7			21
Total	$	25	$	(12	)	$	13		$	53	$	11		$	64
Short-term borrowings
In U.S. offices	$	157	$	(178	)	$	(21	)	$	233	$	264		$	497
In offices outside the U.S.(4)		42		1			43			154		(152	)		2
Total	$	199	$	(177	)	$	22		$	387	$	112		$	499
Long-term debt
In U.S. offices	$	249	$	7		$	256		$	842	$	354		$	1,196
In offices outside the U.S.(4)		22		1			23			33		26			59
Total	$	271	$	8		$	279		$	875	$	380		$	1,255
Total interest expense	$	1,350	$	(6	)	$	1,344		$	3,645	$	1,810		$	5,455
Net interest revenue	$	192	$	339		$	531		$	1,262	$	(458	)	$	804

(1)

The taxable equivalent adjustment is based on the U.S. Federal statutory tax rate of 35%, and is excluded from this presentation.

(2)

Rate/volume variance is allocated based on the percentage relationship of changes in volume and changes in rate to the total net change.

(3)

Detailed average volume, interest revenue and interest expense exclude discontinued operations. See Note 2 on page 87.

(4)

Changes in average rates reflect changes in prevailing local interest rates, including inflationary effects and monetary corrections in certain countries.

(5)

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.

67

CAPITAL RESOURCES AND LIQUIDITY

CAPITAL RESOURCES

Overview

        Capital is generated principally via earnings, issuance of common and preferred stock and subordinated debt, and equity issued as a result of employee benefit plans. It is used primarily to support asset growth in the Company's businesses. Excess capital is used to pay dividends to shareholders, support acquisitions, and repurchase stock.

        Citigroup's capital management framework is designed to ensure that Citigroup and its principal subsidiaries maintain sufficient capital consistent with the Company's risk profile, all applicable regulatory standards and guidelines, and external rating agency considerations. The capital management process is centrally overseen by senior management and is frequently reviewed at the entity and country level.

        Senior management oversees the capital management process of Citigroup and its principal subsidiaries mainly through Citigroup's Global Finance and Asset and Liability Committee (FinALCO). This Committee includes Citigroup's Chairman and Chief Executive Officer, Chief Financial Officer, Head of Corporate Finance and Treasury, Senior Risk Officer, the business segment CEOs, and other senior managers. The Committee's responsibilities include: determining the financial structure of Citigroup and its principal subsidiaries; ensuring that Citigroup and its regulated entities are adequately capitalized; reviewing the funding and capital markets plan for Citigroup; monitoring interest rate risk, corporate and bank liquidity, and the impact of currency translation on non-U.S. earnings and capital; and reviewing and recommending share repurchase levels and dividends on preferred and common stock. The FinALCO has established capital targets for Citigroup and for significant subsidiaries. These targets exceed the regulatory standards.

Capital Ratios

        Citigroup is subject to risk-based capital ratio guidelines issued by the FRB. Capital adequacy is measured via two risk-based ratios, Tier 1 and Total Capital (Tier 1 + Tier 2 Capital). Tier 1 Capital is considered core capital while Total Capital also includes other items such as subordinated debt and loan loss reserves. Both measures of capital are stated as a percent of risk-adjusted assets. Risk-adjusted assets are measured primarily on their perceived credit risk and include certain off-balance sheet exposures, such as unfunded loan commitments and letters of credit and the notional amounts of derivative and foreign exchange contracts. Citigroup is also subject to the Leverage Ratio requirement, a non-risk-based asset ratio, which is defined as Tier 1 Capital as a percentage of adjusted average assets.

        To be "well capitalized" under federal bank regulatory agency definitions, a bank holding company must have a Tier 1 Capital Ratio of at least 6%, a Total Capital Ratio of at least 10%, and a Leverage Ratio of at least 3%, and not be subject to an FRB directive to maintain higher capital levels.

        As noted in the following table, Citigroup maintained a "well capitalized" position during the first three months of 2007 and the full year of 2006.

Citigroup Regulatory Capital Ratios(1)

	March 31, 2007(3)		December 31, 2006
Tier 1 Capital	8.26	%	8.59	%
Total Capital (Tier 1 and Tier 2)	11.48		11.65
Leverage(2)	4.84		5.16

(1)

The FRB granted interim capital relief for the impact of adopting SFAS 158.

(2)

Tier 1 Capital divided by adjusted average assets.

(3)

The impact related to using Citigroup's credit rating under the adoption of SFAS 157 is excluded from Tier 1 Capital at March 31, 2007.

68

Components of Capital Under Regulatory Guidelines

In millions of dollars		March 31, 2007			December 31, 2006
Tier 1 Capital
Common stockholders' equity		$	121,083		$	118,783
Qualifying perpetual preferred stock			1,000			1,000
Qualifying mandatorily redeemable securities of subsidiary trusts			9,440			9,579
Minority interest			1,124			1,107
Less: Net unrealized gains on securities available-for-sale(1)			(1,251	)		(943	)
Less: Accumulated net losses on cash flow hedges, net of tax			500			61
Less: Pension liability adjustment, net of tax(2)			1,570			1,647
Less: Cumulative effect included in fair value of financial liabilities attributable to creditworthiness, net of tax(3)			(222	)		—
Less: Intangible assets:
	Goodwill		(34,380	)		(33,415	)
	Other disallowed intangible assets		(6,589	)		(6,127	)
Other			(853	)		(793	)
Total Tier 1 Capital		$	91,422		$	90,899
Tier 2 Capital
Allowance for credit losses(4)		$	10,604		$	10,034
Qualifying debt(5)			24,447			21,891
Unrealized marketable equity securities gains(1)			562			436
Total Tier 2 Capital		$	35,613		$	32,361
Total Capital (Tier 1 and Tier 2)		$	127,035		$	123,260
Risk-Adjusted Assets(6)		$	1,106,961		$	1,057,872

(1)

Tier 1 Capital excludes unrealized gains and losses on debt securities available-for-sale in accordance with regulatory risk-based capital guidelines. The federal bank regulatory agencies permit institutions to include in Tier 2 Capital up to 45% of pretax net unrealized holding gains on available-for-sale equity securities with readily determinable fair values, net of tax. Institutions are required to deduct from Tier 1 Capital net unrealized holding losses on available-for-sale equity securities with readily determinable fair values, net of tax.

(2)

The FRB granted interim capital relief for the impact of adopting SFAS 158.

(3)

The impact related to using Citigroup's credit rating under the adoption of SFAS 157 is excluded from Tier 1 Capital at March 31, 2007.

(4)

Includable up to 1.25% of risk-adjusted assets. Any excess allowance is deducted from risk-adjusted assets.

(5)

Includes qualifying subordinated debt in an amount not exceeding 50% of Tier 1 Capital.

(6)

Includes risk-weighted credit equivalent amounts, net of applicable bilateral netting agreements, of $87.3 billion for interest rate, commodity and equity derivative contracts and foreign-exchange contracts as of March 31, 2007, compared with $77.1 billion as of December 31, 2006. Market risk-equivalent assets included in risk-adjusted assets amounted to $43.3 billion and $40.1 billion at March 31, 2007 and December 31, 2006, respectively. Risk-adjusted assets also include the effect of other off-balance sheet exposures, such as unused loan commitments and letters of credit, and reflects deductions for certain intangible assets and any excess allowance for credit losses.

        Common stockholders' equity increased approximately $2.3 billion during the first three months of 2007 to $121.1 billion at March 31, 2007, representing 6.0% of assets. This compares to $118.8 billion and 6.3% at year-end 2006.

Common Equity

        The table below summarizes the change in common stockholders' equity:

In billions of dollars
Common Equity, December 31, 2006	$	118.8
Adjustment to opening retained earnings balance, net of tax(1)		(0.2	)
Adjustment to opening Accumulated other comprehensive income (loss) balance, net of tax(2)		0.1
Net income		5.0
Employee benefit plans and other activities		1.0
Dividends		(2.7	)
Treasury stock acquired		(0.6	)
Net change in Accumulated other comprehensive income (loss), net of tax		(0.3	)
Common Equity, March 31, 2007	$	121.1

(1)

The adjustment to the opening balance of retained earnings represents the total of the after-tax amounts for the adoption of the following accounting pronouncements:

•

SFAS 157, for $75 million,

•

SFAS No. 159, for ($99) million,

•

FSP No. FAS 13-2, "Accounting for a Change or Projected Change in the Timing of Cash Flows Relating to Income Taxes Generated by a Leveraged Lease Transaction" (FSP 13-2) for ($148) million, and

•

FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" (FIN 48) for ($14) million.

See Note 1 and Note 16 on pages 85 and 105, respectively.

(2)

The after-tax adjustment to the opening balance of Accumulated other comprehensive income (loss) represents the reclassification of the unrealized gains (losses) related to the Legg Mason securities, as well as several miscellaneous items previously reported in accordance with SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities" (SFAS 115). The related unrealized gains and losses were reclassified to retained earnings upon the adoption of the fair value option in accordance with SFAS 159. See Note 1 and 16 on pages 85 and 105, respectively, for further discussions.

        The decrease in the common stockholders' equity ratio during the three months ended March 31, 2007 reflected the above items and a 7.3% increase in total assets.

        On April 17, 2006, the Board of Directors authorized up to an additional $10 billion in share repurchases. As of March 31, 2007, $6.8 billion remained under authorized repurchase programs after the repurchase of $645 million and $7.0 billion in shares during the three months ended March 31, 2007 and full year 2006, respectively. As a result of the Company's recent acquisitions, the successful Nikko tender offer, and other growth opportunities, it is anticipated that the Company will not resume its share repurchase program for the remainder of the year. This is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" on page 78. For further details, see "Unregistered Sales of Equity Securities and Use of Proceeds" on page 123.

69

        The table below summarizes the Company's repurchase activity:

In millions, except per share amounts	Total Common Shares Repurchased	Dollar Value of Shares Repurchased		Average Price Paid per Share		Dollar Value of Remaining Authorized Repurchase Program
First quarter 2006	42.9	$	2,000	$	46.58	$	2,412
Second quarter 2006	40.8		2,000		48.98		10,412	(1)
Third quarter 2006	40.9		2,000		48.90		8,412
Fourth quarter 2006	19.4		1,000		51.66		7,412
Total 2006	144.0	$	7,000	$	48.60	$	7,412
First quarter 2007(2)	12.1	$	645	$	53.37	$	6,767

(1)

On April 17, 2006, the Board of Directors authorized up to an additional $10 billion in share repurchases.

(2)

See "Unregistered Sales of Equity Securities and Use of Proceeds" on page 123.

Mandatorily Redeemable Securities of Subsidiary Trusts

        Total mandatorily redeemable securities of subsidiary trusts (trust preferred securities), which qualify as Tier 1 Capital, were $9.440 billion at March 31, 2007, as compared to $9.579 billion at December 31, 2006. On March 18, 2007 and March 26, 2007, Citigroup redeemed for cash all of the $23 million and $25 million Trust Preferred Securities of Adam Statutory Trust I and Adam Statutory Trust II, respectively, at the redemption price of $1,000 per preferred security plus any accrued distribution up to but excluding the date of redemption.

        On March 6, 2007, Citigroup issued $1.000 billion of Enhanced Trust Preferred Securities (Citigroup Capital XVII). An additional $100 million was issued, related to this Trust, on March 14, 2007. See Note 12 on page 95 for details on Citigroup Capital XVII.

        On February 15, 2007, Citigroup redeemed for cash all of the $300 million Trust Preferred Securities of Citicorp Capital I, $450 million of Citicorp Capital II, and $400 million of Citigroup Capital II, at the redemption price of $1,000 per preferred security plus any accrued distribution up to, but excluding, the date of redemption.

        On April 23, 2007, Citigroup redeemed for cash all of the $22 million Trust Preferred Securities of Adam Capital Trust II at the redemption price of $1,000 per preferred security plus any accrued distribution up to but excluding the date of redemption.

        The FRB has issued a final rule, with an effective date of April 11, 2005, which retains trust preferred securities in Tier 1 Capital of Bank Holding Companies (BHCs), but with stricter quantitative limits and clearer qualitative standards. Under the rule, after a five-year transition period, the aggregate amount of trust preferred securities and certain other capital elements included in Tier 1 Capital of internationally active banking organizations, such as Citigroup, would be limited to 15% of Tier 1 Capital elements, net of goodwill less any associated deferred tax liability. The amount of trust preferred securities and certain other elements in excess of the limit could be included in Tier 2 Capital, subject to restrictions. Under this rule, Citigroup currently would have less than 12% against the limit. The FRB has granted interim capital relief for the impact of adopting SFAS 158.

        The FRB and the FFIEC may propose amendments to, and issue interpretations of, risk-based capital guidelines and reporting instructions. These may affect reported capital ratios and net risk-adjusted assets.*

Capital Resources of Citigroup's Depository Institutions

        Bank Consolidation Project:    During 2006, Citigroup began and completed the majority of its bank consolidation project, which called for the merger of its twelve U.S.-insured depository institutions into four, as well as the reorganization of its U.S. mortgage banking business. The first phase of this project was completed in July 2006, when CitiFinancial Credit Company (CCC), an indirect wholly owned subsidiary of Citigroup, transferred its ownership of Citicorp Trust Bank, fsb to Citigroup. The second phase occurred in October 2006, when Citigroup reduced its overall number of U.S.-insured depository institutions from twelve to five. Also during this phase, Citibank, N.A. transferred its investment in Citibank (South Dakota), N.A. (the Company's primary banking entity responsible for U.S. credit card activities) to Citigroup. In addition, a majority of the Company's U.S. consumer mortgage lending activity was consolidated within Citibank, N.A. as Citibank (West), FSB, Citibank Texas, N.A., Citibank, FSB and Citibank Delaware were merged into Citibank, N.A. The final phase of this consolidation project is expected to be completed at a later date with the merger of Citibank (Banamex USA) into Citibank, N.A.

        Benefits achieved from reducing the number of depository institutions included optimized capital efficiency, enhanced flexibility of operations as a result of Citibank, N.A.'s larger capital base, reduced regulatory complexity and improved customer relationships.

        Capital Ratios of Depository Institutions:    Citigroup's subsidiary depository institutions in the United States are subject to risk-based capital guidelines issued by their respective primary federal bank regulatory agencies, which are similar to the FRB's guidelines. To be "well capitalized" under federal bank regulatory agency definitions, Citigroup's depository institutions must have a Tier 1 Capital Ratio of at least 6%, a Total Capital (Tier 1 + Tier 2 Capital) Ratio of at least 10% and a Leverage Ratio of at least 5%, and not be subject to a regulatory directive to meet and maintain higher capital levels. At March 31, 2007, all of Citigroup's subsidiary depository institutions were "well capitalized" under the federal regulatory agencies' definitions, including Citigroup's primary depository institution, Citibank, N.A., as noted in the tables on the next page.

*

This statement is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" on page 78.

70

Citibank, N.A. Regulatory Capital Ratios(1)

	Mar. 31, 2007(3)		Dec. 31, 2006
Tier 1 Capital	8.13	%	8.32	%
Total Capital (Tier 1 and Tier 2)	12.05		12.39
Leverage(2)	5.97		6.09

(1)

The U.S. Banking Agencies granted interim capital relief for the impact of adopting SFAS 158.

(2)

Tier 1 Capital divided by adjusted average assets.

(3)

The impact related to using Citigroup's credit rating under the adoption of SFAS 157 is excluded from Tier 1 Capital at March 31, 2007.

Citibank, N.A. Components of Capital Under Regulatory Guidelines(1)

In billions of dollars	Mar. 31, 2007(2)		Dec. 31, 2006
Tier 1 Capital	$	62.2	$	59.9
Total Capital (Tier 1 and Tier 2)		92.2		89.1

(1)

The U.S. Banking Agencies granted interim capital relief for the impact of adopting SFAS 158.

(2)

The impact related to using Citigroup's credit rating under the adoption of SFAS 157 is excluded from Tier 1 Capital at March 31, 2007.

        Citibank, N.A. had net income for the first three months ended March 31, 2007 amounting to $2.2 billion.

        Citibank, N.A. did not issue any additional subordinated notes during the first quarter of 2007. For the full year 2006, Citibank, N.A. issued an additional $7.8 billion of subordinated notes that qualify for inclusion in Citibank, N.A.'s Tier 2 Capital. Total subordinated notes that were outstanding at March 31, 2007 and December 31, 2006 and included in Citibank, N.A.'s Tier 2 Capital amounted to $23.0 billion.

Broker-Dealer Subsidiaries

        The Company's broker-dealer subsidiaries—including Citigroup Global Markets Inc. (CGMI), an indirect wholly owned subsidiary of Citigroup Global Markets Holdings Inc. (CGMHI)—are subject to various securities and commodities regulations and capital adequacy requirements of the regulatory and exchange authorities of the countries in which they operate. The Company's U.S. registered broker-dealer subsidiaries are subject to the Securities and Exchange Commission's Net Capital Rule, Rule 15c3-1 (the Net Capital Rule) under the Exchange Act.

        As a registered broker-dealer, CGMI is subject to the SEC's Net Capital Rule. Under the Net Capital Rule, CGMI is required to maintain minimum net capital equal to 2% of aggregate debit items, as defined. Under NYSE regulations, CGMI may be required to reduce its business if its net capital is less than 4% of aggregate debit items and may also be prohibited from expanding its business or paying cash dividends if resulting net capital would be less than 5% of aggregate debit items. Furthermore, the Net Capital Rule does not permit withdrawal of equity or subordinated capital if the resulting net capital would be less than 5% of aggregate debit items.

        During the third quarter of 2006, the SEC granted CGMI approval to compute net capital in accordance with the provisions of Appendix E of the Net Capital Rule. This methodology allows CGMI to compute market risk capital charges using internal Value-at-Risk models. Under Appendix E, CGMI is also required to hold tentative net capital in excess of $1 billion and net capital in excess of $500 million. The firm is also required to notify the SEC in the event that its tentative net capital is less than $5 billion.

        Compliance with the Net Capital Rule could limit those operations of CGMI that require the intensive use of capital, such as underwriting and trading activities and the financing of customer account balances, and also restrict CGMHI's ability to withdraw capital from its broker-dealer subsidiaries, which in turn could limit CGMHI's ability to pay dividends and make payments on its debt.

        At March 31, 2007, CGMI had net capital, computed in accordance with the Net Capital Rule, of $7.5 billion, which exceeded the minimum requirement by $6.8 billion.

        In addition, certain of the Company's broker-dealer subsidiaries are subject to regulation in the other countries in which they do business, including requirements to maintain specified levels of net capital or its equivalent. The Company's broker-dealer subsidiaries were in compliance with their capital requirements at March 31, 2007.

Regulatory Capital Standards Developments

        Citigroup generally supports the move to a new set of risk-based regulatory capital standards, published on June 26, 2004 (and subsequently amended in November 2005) by the Basel Committee on Banking Supervision (the Basel Committee), consisting of central banks and bank supervisors from 13 countries. The international version of the Basel II framework will allow Citigroup to leverage internal risk models used to measure credit, operational, and market risk exposures to drive regulatory capital calculations. On September 30, 2005, the U.S. banking regulators delayed the U.S. implementation of Basel II by one year. The current U.S. implementation timetable consists of parallel calculations under the current regulatory capital regime (Basel I) and Basel II, starting January 1, 2008, and an implementation transition period, starting January 1, 2009 through year-end 2011 or possibly later. The U.S. regulators have also reserved the right to change how Basel II is applied in the U.S., and retain the existing Prompt Corrective Action and leverage capital requirements applicable to U.S. banking organizations. The new timetable, clarifications, and other proposals are set forth in a notice of proposed rulemaking (NPR) issued on September 25, 2006, which contains a number of material differences from the international version of Basel II.

        Citigroup continues to monitor, analyze and comment on the developing capital standards in the U.S. and in countries where Citigroup has significant presence, in order to assess their collective impact and allocate project management and funding resources accordingly.

71

LIQUIDITY

Overview

        At the Holding Company level for Citigroup, for CGMHI, and for the Combined Holding Company and CGMHI, Citigroup maintains sufficient liquidity to meet all maturing unsecured debt obligations due within a one-year time horizon without accessing the unsecured markets.

Management of Liquidity

        Management of liquidity at Citigroup is the responsibility of the Head of Corporate Finance and Treasury. A uniform liquidity risk management policy exists for Citigroup and its major operating subsidiaries. Under this policy, there is a single set of standards for the measurement of liquidity risk in order to ensure consistency across businesses, stability in methodologies and transparency of risk. Management of liquidity at each operating subsidiary and/or country is performed on a daily basis and is monitored by Corporate Treasury and independent risk management.

        The basis of Citigroup's liquidity management is strong decentralized liquidity management at each of its principal operating subsidiaries and in each of its countries, combined with an active corporate oversight function. As discussed in "Capital Resources and Liquidity" on page 68, Citigroup's FinALCO undertakes this oversight responsibility, along with the Head of Corporate Finance and Treasury. One of the objectives of the FinALCO is to monitor and review the overall liquidity and balance sheet positions of Citigroup and its principal subsidiaries. Similarly, Asset and Liability Committees are also established for each country and/or major line of business.

Monitoring Liquidity

        Each principal operating subsidiary and/or country must prepare an annual funding and liquidity plan for review by the Head of Corporate Finance and Treasury and approval by independent risk management. The funding and liquidity plan includes analysis of the balance sheet, as well as the economic and business conditions impacting the liquidity of the major operating subsidiary and/or country. As part of the funding and liquidity plan, liquidity limits, liquidity ratios, market triggers, and assumptions for periodic stress tests are established and approved.

Liquidity Limits

        Liquidity limits establish boundaries for market access in business-as-usual conditions and are monitored against the liquidity position on a daily basis. These limits are established based on the size of the balance sheet, depth of the market, experience level of local management, stability of the liabilities, and liquidity of the assets. Finally, the limits are subject to the evaluation of the entities' stress test results. Generally, limits are established such that in stress scenarios, entities are self-funded or net providers of liquidity.

Liquidity Ratios

        A series of standard corporate-wide liquidity ratios have been established to monitor the structural elements of Citigroup's liquidity. For bank entities, these include cash capital (defined as core deposits, long-term debt, and capital compared with illiquid assets), liquid assets against liquidity gaps, core deposits to loans, long-term assets to long-term liabilities, and deposits to loans. Several measures exist to review potential concentrations of funding by individual name, product, industry, or geography. At the Holding Company level for Citigroup, for CGMHI and for the Combined Holding Company and CGMHI, ratios are established for liquid assets against short-term obligations. Triggers for management discussion, which may result in other actions, have been established against these ratios. In addition, each individual major operating subsidiary or country establishes targets against these ratios and may monitor other ratios as approved in its funding and liquidity plan.

Market Triggers

        Market triggers are internal or external market or economic factors that may imply a change to market liquidity or Citigroup's access to the markets. Citigroup market triggers are monitored by the Head of Corporate Finance and Treasury and the Head of Risk Oversight and are discussed in the FinALCO. Appropriate market triggers are also established and monitored for each major operating subsidiary and/or country as part of the funding and liquidity plans. Local triggers are reviewed with the local country or business ALCO and independent risk management.

Stress Testing

        Simulated liquidity stress testing is periodically performed for each major operating subsidiary and/or country. The scenarios include assumptions about significant changes in key funding sources, credit ratings, contingent uses of funding, and political and economic conditions in certain countries. The results of stress tests of individual countries and operating subsidiaries are reviewed to ensure that each individual major operating subsidiary or country is either self-funded or a net provider of liquidity. In addition, a Contingency Funding Plan is prepared on a periodic basis for Citigroup. The plan includes detailed policies, procedures, roles and responsibilities, and the results of corporate stress tests. The product of these stress tests is a series of alternatives that can be used by the Head of Corporate Finance and Treasury in a liquidity event.

        CGMHI monitors liquidity by tracking asset levels, collateral and funding availability to maintain flexibility to meet its financial commitments. As a policy, CGMHI attempts to maintain sufficient capital and funding sources in order to have the capacity to finance itself on a fully collateralized basis in the event that its access to uncollateralized financing is temporarily impaired. This is documented in CGMHI's contingency funding plan. This plan is reviewed periodically to keep the funding options current and in line with market conditions. The management of this plan includes an analysis used to determine CGMHI's ability to withstand varying levels of stress, including rating downgrades, which could impact its liquidation horizons and required margins. CGMHI maintains liquidity reserves of cash and loan value of unencumbered securities in excess of its outstanding short-term uncollateralized liabilities. This is monitored on a daily basis. CGMHI also ensures that long-term illiquid assets are funded with long-term liabilities.

72

FUNDING

Overview

        As a financial holding company, substantially all of Citigroup's net earnings are generated within its operating subsidiaries. These subsidiaries make funds available to Citigroup, primarily in the form of dividends. Certain subsidiaries' dividend paying abilities may be limited by covenant restrictions in credit agreements, regulatory requirements and/or rating agency requirements that also impact their capitalization levels.

Banking Subsidiaries

        There are various legal limitations on the ability of Citigroup's subsidiary depository institutions to extend credit, pay dividends or otherwise supply funds to Citigroup and its nonbank subsidiaries. The approval of the Office of the Comptroller of the Currency, in the case of national banks, or the Office of Thrift Supervision, in the case of federal savings banks, is required if total dividends declared in any calendar year exceed amounts specified by the applicable agency's regulations. State-chartered depository institutions are subject to dividend limitations imposed by applicable state law.

        As of March 31, 2007, Citigroup's subsidiary depository institutions can declare dividends to their parent companies, without regulatory approval, of approximately $13.2 billion. In determining the dividends, each depository institution must also consider its effect on applicable risk-based capital and Leverage Ratio requirements, as well as policy statements of the federal regulatory agencies that indicate that banking organizations should generally pay dividends out of current operating earnings. Consistent with these considerations, Citigroup estimates that, as of March 31, 2007, its subsidiary depository institutions can distribute dividends to Citigroup of approximately $10.1 billion of the available $13.2 billion.

Non-Banking Subsidiaries

        Citigroup also receives dividends from its nonbank subsidiaries. These nonbank subsidiaries are generally not subject to regulatory restrictions on dividends.

        As discussed in "Capital Resources and Liquidity" on page 68, the ability of CGMHI to declare dividends can be restricted by capital considerations of its broker-dealer subsidiaries.

        During 2007, it is not anticipated that any restrictions on the subsidiaries' dividending capability will restrict Citigroup's ability to meet its obligations as and when they become due.*

Sources of Funding

        Primary sources of funding for Citigroup and its principal subsidiaries include:

•

deposits;



•

collateralized financing transactions;



•

senior and subordinated debt;



•

commercial paper;



•

trust preferred securities; and



•

purchased/wholesale funds.

        Citigroup and its principal subsidiaries also generate funds through securitizing financial assets, including credit card receivables and single-family or multi-family residences. See Note 13 on page 98 for additional information about securitization activities. Finally, Citigroup's net earnings provide a significant source of funding to the corporation.

        Citigroup's funding sources are well diversified across funding types and geography, a benefit of the strength of the global franchise. Funding for the parent and its major operating subsidiaries includes a large geographically diverse retail and corporate deposit base of $738.5 billion. A significant portion of these deposits has been, and is expected to be, long-term and stable and is considered core.

        Citigroup and its subsidiaries have a significant presence in the global capital markets. Citigroup primarily conducts its capital markets funding activities within two legal entities: (i) Citigroup Inc., which issues long-term debt, medium-term notes, trust preferred securities, and preferred and common stock; and (ii) Citigroup Funding Inc. (CFI), a first-tier subsidiary of Citigroup, which issues commercial paper, medium- term notes and structured equity-linked and credit-linked notes, all of which are guaranteed by Citigroup.

        Citigroup also guarantees various debt obligations of CGMHI, Associates and CitiFinancial Credit Company, the latter two being indirect subsidiaries of Citigroup. In addition, Citigroup guarantees various debt obligations of Citigroup Finance Canada Inc. (CFCI), a wholly owned subsidiary of Associates. CFCI continues to issue debt in the Canadian market supported by a Citigroup guarantee. See Note 20 on page 115 for further discussions. Other significant elements of long-term debt in the Consolidated Balance Sheet include collateralized advances from the Federal Home Loan Bank system, asset-backed outstandings, and certain borrowings of foreign subsidiaries.

        CGMHI's consolidated balance sheet is highly liquid, with the vast majority of its assets consisting of marketable securities and collateralized short-term financing agreements arising from securities transactions. The highly liquid nature of these assets provides CGMHI with flexibility in financing and managing its business. CGMHI monitors and evaluates the adequacy of its capital and borrowing base on a daily basis to maintain liquidity, and to ensure that its capital base supports the regulatory capital requirements of its subsidiaries.

        Citigroup uses its funding to service debt obligations, to pay dividends to its stockholders, to support organic growth, to fund acquisitions and to repurchase its shares, pursuant to Board of Directors approved plans.

*

This statement is a forward-looking statement within the meaning of the Private Securities Litigation Reform Act. See "Forward-Looking Statements" on page 78.

73

        Each of Citigroup's major operating subsidiaries finances its operations on a basis consistent with its capitalization, regulatory structure and the environment in which it operates. Particular attention is paid to those businesses that for tax, sovereign risk, or regulatory reasons cannot be freely and readily funded in the international markets.

        Citigroup's borrowings are diversified by geography, investor, instrument and currency. Decisions regarding the ultimate currency and interest rate profile of funding generated through these borrowings can be separated from the actual issuance through the use of derivative financial products.

        At March 31, 2007, long-term debt and commercial paper outstanding for Citigroup Parent Company, CGMHI, Citigroup Funding Inc. and Citigroup's other subsidiaries were as follows:

In billions of dollars	Citigroup Parent Company		CGMHI		Citigroup Funding Inc.		Other Citigroup Subsidiaries
Long-term debt	$	134.9	$	28.4	$	24.5	$	123.0	(1)
Commercial paper		—		—	$	39.7	$	0.9

(1)

At March 31, 2007, approximately $87.6 billion relates to collateralized advances from the Federal Home Loan Bank.

        See Note 12 on page 95 for further detail on long-term debt and commercial paper outstanding.

        Citigroup's ability to access the capital markets and other sources of wholesale funds, as well as the cost of these funds, is highly dependent on its credit ratings. The accompanying chart indicates the current ratings for Citigroup.

Citigroup's Debt Ratings as of March 31, 2007

	Citigroup Inc.			Citigroup Funding Inc.			Citibank, N.A.
	Senior Debt	Subordinated Debt	Commercial Paper	Senior Debt	Subordinated Debt	Commercial Paper	Long- Term	Short- Term
Fitch Ratings	AA+	AA	F1+	AA+	AA	F1+	AA+	F1+
Moody's Investors Service	Aal	Aa2	P-1	Aa1	Aa2	P-1	Aaa	P-1
Standard & Poor's	AA	AA-	A-1+	AA	AA-	A-1+	AA+	A-1+

        On February 14, 2007, Standard & Poor's upgraded the ratings of Citigroup and certain rated subsidiaries. The senior debt ratings of Citigroup and Citigroup Funding Inc. (CFI) were upgraded to "AA" from "AA-." The subordinated debt ratings of Citigroup and Citigroup Funding Inc. (CFI) were upgraded to "AA-" from "A+." The long-term rating of Citibank, N.A. was upgraded to "AA+" from "AA." The outlook for all of Citigroup's ratings is "stable."

        Some of Citigroup's nonbank subsidiaries, including CGMHI, have credit facilities with Citigroup's subsidiary depository institutions, including Citibank, N.A. Borrowings under these facilities must be secured in accordance with Section 23A of the Federal Reserve Act. There are various legal restrictions on the extent to which a bank holding company and certain of its nonbank subsidiaries can borrow or obtain credit from Citigroup's subsidiary depository institutions or engage in certain other transactions with them. In general, these restrictions require that transactions be on arm's-length terms and be secured by designated amounts of specified collateral. See Note 12 on page 95.

74

OFF-BALANCE SHEET ARRANGEMENTS

Overview

        Citigroup and its subsidiaries are involved with several types of off-balance sheet arrangements, including special purpose entities (SPEs), lines and letters of credit, and loan commitments.

        The securitization process enhances the liquidity of the financial markets, may spread credit risk among several market participants, and makes new funds available to extend credit to consumers and commercial entities.

Uses of SPEs

        In order to execute securitizations, the Company uses SPEs. An SPE is an entity in the form of a trust or other legal vehicle designed to fulfill a specific limited need of the company that organized it.

        The principal uses of SPEs are to obtain liquidity and favorable capital treatment by securitizing certain of Citigroup's financial assets, to assist clients in securitizing their financial assets, and to create investment products for clients. SPEs may be organized as trusts, partnerships, or corporations. In a securitization, the company transferring assets to an SPE converts those assets into cash before they would have been realized in the normal course of business, through the SPE's issuing debt and equity instruments, certificates, commercial paper, and other notes of indebtedness. Investors usually have recourse to the assets in the SPE and often benefit from other credit enhancements, such as a collateral account or overcollateralization in the form of excess assets in the SPE, or from a liquidity facility, such as a line of credit or asset purchase agreement. Accordingly, the SPE can typically obtain a more favorable credit rating from rating agencies than the transferor could obtain for its own debt issuances, resulting in less expensive financing costs. The SPE may also enter into derivative contracts in order to convert the yield or currency of the underlying assets to match the needs of the SPE investors, or to limit or change the credit risk of the SPE. Citigroup may be the counterparty to these derivatives.

        SPEs may be Qualifying SPEs (QSPEs) or variable interest entities (VIEs) or neither. A VIE is a type of SPE that does not have sufficient equity to finance its activities without additional subordinated financial support from third parties. Its investors may not have the power to make significant decisions about the entity's operations, or investors may not share pro rata in the entity's expected returns or losses. The Company's credit card receivable and mortgage loan securitizations are organized as QSPEs and are, therefore, not VIEs subject to FASB Interpretation No. 46, "Consolidation of Variable Interest Entities (revised December 2003)," (FIN 46-R). When an entity is deemed a VIE under FIN 46-R, the entity in question must be consolidated by the primary beneficiary; however, the Company is not the primary beneficiary of most of these entities and as such does not consolidate most of them.

Securitization of Citigroup's Assets

        In some of these off-balance sheet arrangements, including credit card receivable and mortgage loan securitizations, Citigroup is securitizing assets that were previously recorded on its Consolidated Balance Sheet. A summary of certain cash flows received from and paid to securitization trusts is included in Note 13 on page 98.

Credit Card Receivables

        Credit card receivables are securitized through trusts, which are established to purchase the receivables. Citigroup sells receivables into the trusts on a non-recourse basis. Credit card securitizations are revolving securitizations; that is, as customers pay their credit card balances, the cash proceeds are used to purchase new receivables and replenish the receivables in the trust. CGMI is one of several underwriters that distribute securities issued by the trusts to investors. The Company relies on securitizations to fund a significant portion of its managedU.S. Cards business, which includes both on-balance sheet and securitized receivables.

        The following table reflects amounts related to the Company's securitized credit card receivables at March 31, 2007 and December 31, 2006:

In billions of dollars	Mar. 31, 2007		Dec. 31, 2006
Principal amount of credit card receivables in trusts	$	108.9	$	112.4
Ownership interests in principal amount of trust credit card receivables:
Sold to investors via trust-issued securities		93.8		93.1
Retained by Citigroup as trust-issued securities		3.3		5.1
Retained by Citigroup via non-certificated interest recorded as consumer loans		11.8		14.2
Total ownership interests in principal amount of trust credit card receivables	$	108.9	$	112.4
Other amounts recorded on the balance sheet related to interests retained in the trusts:
Amounts receivable from trusts	$	4.5	$	4.5
Amounts payable to trusts		1.8		1.7
Residual interest retained in trust cash flows		2.7		2.5

        In the first quarters of 2007 and 2006, the Company recorded net gains from securitization of credit card receivables of $248 million and $171 million, respectively. Net gains reflect the following:

•

incremental gains from new securitizations



•

the reversal of the allowance for loan losses associated with receivables sold



•

net gains on replenishments of the trust assets



•

offset by other-than-temporary impairments.

        See Note 13 on page 98 for additional information regarding the Company's securitization activities.

75

Mortgages and Other Assets

        The Company provides a wide range of mortgage and other loan products to its customers. In addition to providing a source of liquidity and less expensive funding, securitizing these assets also reduces the Company's credit exposure to the borrowers. The Company's mortgage loan securitizations are primarily non-recourse, thereby effectively transferring the risk of future credit losses to the purchasers of the securities issued by the trust. In addition to servicing rights, the Company also retains a residual interest in its student loan and other asset securitizations, consisting of securities and interest-only strips that arise from the calculation of gain or loss at the time assets are sold to the SPE. The Company recognized gains related to the securitization of mortgages and other assets of $44 million and $51 million in the first quarters of 2007 and 2006, respectively.

Securitization of Client Assets

        The Company acts as an intermediary for its corporate clients, assisting them in obtaining liquidity by selling their trade receivables or other financial assets to an SPE.

        In addition, Citigroup administers several third-party-owned, special purpose, multi-seller finance companies that purchase pools of trade receivables, credit card receivables, and other financial assets from its clients. As administrator, the Company provides accounting, funding, and operations services to these conduits but has no ownership interest. Generally, the clients continue to service the transferred assets. The conduits' asset purchases are funded by issuing commercial paper and medium-term notes. Clients absorb the first losses of the conduits by providing collateral in the form of excess assets or holding a residual interest. The Company, along with other financial institutions, provides liquidity facilities, such as commercial paper backstop lines of credit to the conduits. The Company also provides loss enhancement in the form of letters of credit and other guarantees. All fees are charged on a market basis.

        At March 31, 2007 and December 31, 2006, total assets and liabilities in the unconsolidated conduits were $74 billion and $66 billion, respectively.

Creation of Other Investment and Financing Products

        The Company packages and securitizes assets purchased in the financial markets in order to create new security offerings, including arbitrage collateralized debt obligations (CDOs) and synthetic CDOs for institutional clients and retail customers, which match the clients' investment needs and preferences. Typically these instruments diversify investors' risk to a pool of assets as compared with investments in individual assets. The VIEs, which are issuers of CDO securities, are generally organized as limited liability corporations. The Company typically receives fees for structuring and/or distributing the securities sold to investors. In some cases, the Company may repackage the investment with higher-rated debt CDO securities or U.S. Treasury securities to provide a greater or a very high degree of certainty of the return of invested principal. A third-party manager is typically retained by the VIE to select collateral for inclusion in the pool and then actively manage it, or, in other cases, only to manage work-out credits. The Company may also provide other financial services and/or products to the VIEs for market-rate fees. These may include: the provision of liquidity or contingent liquidity facilities, interest rate or foreign exchange hedges and credit derivative instruments, as well as the purchasing and warehousing of securities until they are sold to the SPE. The Company is not the primary beneficiary of these VIEs under FIN 46-R due to its limited continuing involvement and, as a result, we do not consolidate their assets and liabilities in our financial statements.

        See Note 13 on page 98 for additional information about off-balance sheet arrangements.

Credit Commitments and Lines of Credit

        The table below summarizes Citigroup's credit commitments as of March 31, 2007 and December 31, 2006.

In millions of dollars	March 31, 2007		December 31, 2006
Financial standby letters of credit and foreign office guarantees	$	83,568	$	72,548
Performance standby letters of credit and foreign office guarantees		15,861		15,802
Commercial and similar letters of credit		7,969		7,861
One- to four-family residential mortgages		5,669		3,457
Revolving open-end loans secured by one- to four-family residential properties		33,528		32,449
Commercial real estate, construction and land development		4,875		4,007
Credit card lines(1)		1,006,204		987,409
Commercial and other consumer loan commitments(2)		469,403		439,931
Total	$	1,627,077	$	1,563,464

(1)

Credit card lines are unconditionally cancelable by the issuer.

(2)

Includes commercial commitments to make or purchase loans, to purchase third-party receivables, and to provide note issuance or revolving underwriting facilities. Amounts include $260 billion and $251 billion with original maturity of less than one year at March 31, 2007 and December 31, 2006, respectively.

76

CORPORATE GOVERNANCE AND CONTROLS AND PROCEDURES

Corporate Governance

        Citigroup has a Code of Conduct that maintains the Company's commitment to the highest standards of conduct. The Company has established an ethics hotline for employees. The Code of Conduct is supplemented by a Code of Ethics for Financial Professionals (including finance, accounting, treasury, tax and investor relations professionals) that applies worldwide.

        Both the Code of Conduct and the Code of Ethics for Financial Professionals can be found on the Citigroup Web site, www.citigroup.com, by clicking on the "Corporate Governance" page. The Company's Corporate Governance Guidelines and the charters for the Audit and Risk Management Committee, the Nomination and Governance Committee, the Personnel and Compensation Committee, and the Public Affairs Committee of the Board are also available under the "Corporate Governance" page, or by writing to Citigroup Inc., Corporate Governance, 425 Park Avenue, 2nd Floor, New York, New York 10043.

Controls and Procedures

Disclosure

        The Company's disclosure controls and procedures are designed to ensure that information required to be disclosed under the Exchange Act securities laws is accumulated and communicated to management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), to allow for timely decisions regarding required disclosure and appropriate SEC filings.

        The Company's Disclosure Committee is responsible for ensuring that there is an adequate and effective process for establishing, maintaining and evaluating disclosure controls and procedures for the Company's external disclosures.

        The Company's management, with the participation of the Company's CEO and CFO, has evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of March 31, 2007 and, based on that evaluation, the CEO and CFO have concluded that at that date the Company's disclosure controls and procedures were effective.

Financial Reporting

        The Company'sinternal control over financial reporting is a process under the supervision of the CEO and CFO, and effected by Citigroup's Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. These controls include policies and procedures that:

•

pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;



•

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that the Company's receipts and expenditures are being made only in accordance with authorizations of the Company's management and directors; and



•

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.

        Citigroup has had a longstanding process whereby business and financial officers throughout the Company attest to the accuracy of financial information reported in corporate systems as well as the effectiveness of internal controls over financial reporting and disclosure processes.

        There were no changes in the Company's internal control over financial reporting during the fiscal quarter ended March 31, 2007 that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

77

FORWARD-LOOKING STATEMENTS

        In this Quarterly Report on Form 10-Q, the Company uses certain forward-looking statements when describing future business conditions. The Company's actual results may differ materially from those included in the forward-looking statements and are indicated by words such as "believe," "expect," "anticipate," "intend," "estimate," "may increase," "may fluctuate," and similar expressions, or future or conditional verbs such as "will," "should," "would," and "could."

        These forward-looking statements involve external risks and uncertainties including, but not limited, to those described in the Company's 2006 Annual Report on Form 10-K section entitled "Risk Factors": economic conditions; credit, market and liquidity risk; competition; country risk; operational risk; U.S. fiscal policies; reputational and legal risk; and certain regulatory considerations. Risks and uncertainties disclosed in this 10-Q include, but are not limited to:

•

the effect that our Structural Expense Review will have on our expenses;



•

the effect that possible amendments to, and interpretations of, risk-based capital guidelines and reporting instructions might have on Citigroup's reported capital ratios and net risk-adjusted assets; and



•

the dividending capabilities of Citigroup's subsidiaries.

78

Citigroup Inc.

TABLE OF CONTENTS

		Page No.
Financial Statements:
	Consolidated Statement of Income (Unaudited)—Three Months Ended March 31, 2007 and 2006	80
	Consolidated Balance Sheet—March 31, 2007 (Unaudited) and December 31, 2006	81
	Consolidated Statement of Changes in Stockholders' Equity (Unaudited)—Three Months Ended March 31, 2007 and 2006	82
	Consolidated Statement of Cash Flows (Unaudited)—Three Months Ended March 31, 2007 and 2006	83
	Consolidated Balance Sheet—Citibank, N.A. and Subsidiaries March 31, 2007 (Unaudited) and December 31, 2006	84
Notes to Consolidated Financial Statements (Unaudited):
	Note 1—Basis of Presentation	85
	Note 2—Discontinued Operations	87
	Note 3—Business Segments	89
	Note 4—Interest Revenue and Expense	90
	Note 5—Commissions and Fees	90
	Note 6—Retirement Benefits	91
	Note 7—Restructuring	92
	Note 8—Earnings Per Share	93
	Note 9—Trading Account Assets and Liabilities	93
	Note 10—Goodwill and Intangible Assets	94
	Note 11—Investments	95
	Note 12—Debt	95
	Note 13—Securitizations and Variable Interest Entities	98
	Note 14—Changes in Accumulated Other Comprehensive Income (Loss)	102
	Note 15—Derivatives Activities	102
	Note 16—Fair Value	105
	Note 17—Guarantees	111
	Note 18—Contingencies	113
	Note 19—Citibank, N.A. and Subsidiaries Statement of Changes in Stockholder's Equity	114
	Note 20—Condensed Consolidating Financial Statement Schedules	115

79

CONSOLIDATED FINANCIAL STATEMENTS

CITIGROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME (Unaudited)

	Three Months Ended March 31,
In millions of dollars, except per share amounts	2007		2006(1)
Revenues
Interest revenue	$	28,132	$	21,873
Interest expense		17,562		12,107
Net interest revenue	$	10,570	$	9,766
Commissions and fees	$	5,773	$	5,188
Principal transactions		2,997		2,117
Administration and other fiduciary fees		1,949		1,705
Realized gains (losses) from sales of investments		473		379
Insurance premiums		838		770
Other revenue		2,859		2,258
Total non-interest revenues	$	14,889	$	12,417
Total revenues, net of interest expense	$	25,459	$	22,183
Provision for credit losses and for benefits and claims
Provision for loan losses	$	2,706	$	1,396
Policyholder benefits and claims		261		227
Provision for unfunded lending commitments		—		50
Total provision for credit losses and for benefits and claims	$	2,967	$	1,673
Operating expenses
Compensation and benefits	$	8,699	$	8,263
Net occupancy expense		1,529		1,382
Technology/communication expense		979		886
Advertising and marketing expense		617		603
Restructuring expense		1,377		—
Other operating expenses		2,370		2,224
Total operating expenses	$	15,571	$	13,358
Income from continuing operations before income taxes and minority interest	$	6,921	$	7,152
Provision for income taxes		1,862		1,537
Minority interest, net of taxes		47		60
Income from continuing operations	$	5,012	$	5,555
Discontinued operations
Income from discontinued operations	$	—	$	1
Gain on sale		—		21
Provision (benefit) for income taxes and minority interest, net of taxes		—		(62	)
Income from discontinued operations, net of taxes	$	—	$	84
Net income	$	5,012	$	5,639
Basic earnings per share(2)
Income from continuing operations	$	1.02	$	1.13
Income from discontinued operations, net of taxes		—		0.02
Net Income	$	1.02	$	1.14
Weighted average common shares outstanding		4,877.0		4,920.7
Diluted earnings per share(2)
Income from continuing operations	$	1.01	$	1.11
Income from discontinued operations, net of taxes		—		0.02
Net income	$	1.01	$	1.12
Adjusted weighted average common shares outstanding		4,967.9		5,007.9

(1)

Reclassified to conform to the current period's presentation.

(2)

Due to rounding, earnings per share on continuing and discontinued operations may not sum to earnings per share on net income.

See Notes to the Unaudited Consolidated Financial Statements.

80

CITIGROUP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

In millions of dollars, except shares		March 31, 2007 (Unaudited)			December 31, 2006
Assets
Cash and due from banks (including segregated cash and other deposits)		$	24,421		$	26,514
Deposits with banks			44,906			42,522
Federal funds sold and securities borrowed or purchased under agreements to resell (including $78,113 at fair value as of March 31, 2007)			303,925			282,817
Brokerage receivables			51,976			44,445
Trading account assets (including $167,214 and $125,231 pledged to creditors at March 31, 2007 and December 31, 2006, respectively)			460,065			393,925
Investments (including $21,018 and $16,355 pledged to creditors as of March 31, 2007 and December 31, 2006, respectively)			286,567			273,591
Loans, net of unearned income
	Consumer		519,105			512,921
	Corporate (including $1,832 and $384 at fair value as of March 31, 2007 and December 31, 2006, respectively)		174,239			166,271
Loans, net of unearned income		$	693,344		$	679,192
	Allowance for loan losses		(9,510	)		(8,940	)
Total loans, net		$	683,834		$	670,252
Goodwill			34,380			33,415
Intangible assets			19,330			15,901
Other assets (including $13,375 at fair value as of March 31, 2007)			111,562			100,936
Total assets		$	2,020,966		$	1,884,318
Liabilities
	Non-interest-bearing deposits in U.S. offices	$	39,296		$	38,615
	Interest-bearing deposits in U.S. offices (including $584 and $366 at fair value As of March 31, 2007 and December 31, 2006, respectively)		198,840			195,002
	Non-interest-bearing deposits in offices outside the U.S.		36,328			35,149
	Interest-bearing deposits in offices outside the U.S. (including $1,470 and $472 at fair value at March 31, 2007 and December 31, 2006, respectively)		464,057			443,275
Total deposits		$	738,521		$	712,041
Federal funds purchased and securities loaned or sold under agreements to repurchase (including $180,846 at fair value as of March 31, 2007)			393,670			349,235
Brokerage payables			88,722			85,119
Trading account liabilities			173,902			145,887
Short-term borrowings (including $14,304 and $2,012 at fair value as of March 31, 2007 and December 31, 2006, respectively)			111,179			100,833
Long-term debt (including $31,237 and $9,439 at fair value as of March 31, 2007 and December 31, 2006, respectively)			310,768			288,494
Other liabilities (including $962 at fair value as of March 31, 2007)			82,121			82,926
Total liabilities		$	1,898,883		$	1,764,535
Stockholders' equity
Preferred stock ($1.00 par value; authorized shares: 30 million), at aggregate liquidation value		$	1,000		$	1,000
Common stock ($.01 par value; authorized shares: 15 billion), issued shares—5,477,416,086 shares at March 31, 2007 and at December 31, 2006			55			55
Additional paid-in capital			17,341			18,253
Retained earnings			131,395			129,267
Treasury stock, at cost:March 31, 2007—530,976,999 shares and December 31, 2006—565,422,301 shares			(23,833	)		(25,092	)
Accumulated other comprehensive income (loss)			(3,875	)		(3,700	)
Total stockholders' equity		$	122,083		$	119,783
Total liabilities and stockholders' equity		$	2,020,966		$	1,884,318

See Notes to the Unaudited Consolidated Financial Statements.

81

CITIGROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited)

	Three Months Ended March 31,
In millions of dollars, except shares in thousands	2007			2006
Preferred stock at aggregate liquidation value
Balance, beginning of period	$	1,000		$	1,125
Redemption or retirement of preferred stock		—			(125	)
Balance, end of period	$	1,000		$	1,000
Common stock and additional paid-in capital
Balance, beginning of period	$	18,308		$	17,538
Employee benefit plans		(913	)		(365	)
Other		1			1
Balance, end of period	$	17,396		$	17,174
Retained earnings
Balance, beginning of period	$	129,267		$	117,555
Adjustment to opening balance, net of tax(1)		(186	)		—
Adjusted balance, beginning of period	$	129,081		$	117,555
Net income		5,012			5,639
Common dividends(2)		(2,682	)		(2,474	)
Preferred dividends		(16	)		(17	)
Balance, end of period	$	131,395		$	120,703
Treasury stock, at cost
Balance, beginning of period	$	(25,092	)	$	(21,149	)
Issuance of shares pursuant to employee benefit plans		1,904			1,391
Treasury stock acquired(3)		(645	)		(2,000	)
Other		—			5
Balance, end of period	$	(23,833	)	$	(21,753	)
Accumulated other comprehensive income (loss)
Balance, beginning of period	$	(3,700	)	$	(2,532	)
Adjustment to opening balance, net of tax(4)		149			—
Adjusted balance, beginning of period	$	(3,551	)	$	(2,532	)
Net change in unrealized gains and losses on investment securities, net of tax		159			(356	)
Net change in cash flow hedges, net of tax		(439	)		206
Net change in foreign currency translation adjustment, net of tax		(121	)		(28	)
Pension liability adjustment, net of tax		77			4
Net change in Accumulated other comprehensive income (loss)	$	(324	)	$	(174	)
Balance, end of period	$	(3,875	)	$	(2,706	)
Total common stockholders' equity (shares outstanding: 4,946,439 at March 31, 2007 and 4,971,241 at December 31, 2006)	$	121,083		$	113,418
Total stockholders' equity	$	122,083		$	114,418
Comprehensive income
Net income	$	5,012		$	5,639
Net change in Accumulated other comprehensive income (loss)		(324	)		(174	)
Total comprehensive income	$	4,688		$	5,465

(1)

The adjustment to the opening balance of retained earnings represents the total of the after-tax amounts for the adoption of the following accounting pronouncements:

•

SFAS 157 for $75 million,

•

SFAS 159 for ($99) million,

•

FSP 13-2 for ($148) million, and

•

FIN 48 for ($14) million.

See Note 1 and Note 16 on pages 85 and 105, respectively.

(2)

Common dividends declared were 54 cents per share in the first quarter of 2007 and 49 cents per share in the first quarter of 2006.

(3)

All open market repurchases were transacted under an existing authorized share repurchase plan.

(4)

The after-tax adjustment to the opening balance of Accumulated other comprehensive income (loss) represents the reclassification of the unrealized gains (losses) related to the Legg Mason securities as well as several miscellaneous items previously reported in accordance with SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities" (SFAS 115). The related unrealized gains and losses were reclassified to retained earnings upon the adoption of the fair value option in accordance with SFAS 159. See Note 1 and Note 16 on pages 85 and 105 for further discussions.

See Notes to the Unaudited Consolidated Financial Statements.

82

CITIGROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

		Three Months Ended March 31,
In millions of dollars		2007			2006(1)
Cash flows from operating activities of continuing operations
Net income		$	5,012		$	5,639
	Income from discontinued operations, net of taxes and minority interest		—			84
Income from continuing operations		$	5,012		$	5,555
Adjustments to reconcile net income to net cash (used in) provided by operating activities of continuing operations
	Amortization of deferred policy acquisition costs and present value of future profits		79			70
	Additions to deferred policy acquisition costs		(110	)		(88	)
	Depreciation and amortization		573			599
	Provision for credit losses		2,706			1,446
	Change in trading account assets		(66,140	)		(32,315	)
	Change in trading account liabilities		28,015			23,780
	Change in federal funds sold and securities borrowed or purchased under agreements to resell		(21,108	)		(22,088	)
	Change in federal funds purchased and securities loaned or sold under agreements to repurchase		44,435			37,148
	Change in brokerage receivables net of brokerage payables		(3,928	)		(526	)
	Net gains from sales of investments		(473	)		(379	)
	Change in loans held for sale		(1,513	)		(1,725	)
	Other, net		(5,965	)		(8,307	)
Total adjustments		$	(23,429	)	$	(2,385	)
Net cash (used in) provided by operating activities of continuing operations		$	(18,417	)	$	3,170
Cash flows from investing activities of continuing operations
Change in deposits at interest with banks		$	(2,384	)	$	(1,575	)
Change in loans			(72,413	)		(85,820	)
Proceeds from sales and securitizations of loans			61,333			63,397
Purchases of investments			(81,229	)		(63,425	)
Proceeds from sales of investments			39,017			17,444
Proceeds from maturities of investments			34,393			32,402
Other investments, primarily short-term, net			—			(44	)
Capital expenditures on premises and equipment			(784	)		(875	)
Proceeds from sales of premises and equipment, subsidiaries and affiliates, and repossessed assets			516			525
Business acquisitions			(2,353	)		—
Net cash used in investing activities of continuing operations		$	(23,904	)	$	(37,971	)
Cash flows from financing activities of continuing operations
Dividends paid		$	(2,698	)	$	(2,491	)
Issuance of common stock			394			258
Redemption or retirement of preferred stock			—			(125	)
Treasury stock acquired			(645	)		(2,000	)
Stock tendered for payment of withholding taxes			(819	)		(569	)
Issuance of long-term debt			34,760			25,040
Payments and redemptions of long-term debt			(25,393	)		(14,425	)
Change in deposits			24,902			35,530
Change in short-term borrowings			9,718			(8,800	)
Net cash provided by financing activities of continuing operations		$	40,219		$	32,418
Effect of exchange rate changes on cash and cash equivalents		$	9		$	162
Change in cash and due from banks		$	(2,093	)	$	(2,221	)
Cash and due from banks at beginning of period		$	26,514		$	23,632
Cash and due from banks at end of period		$	24,421			21,411
Supplemental disclosure of cash flow information for continuing operations
Cash paid during the period for income taxes		$	1,826		$	1,017
Cash paid during the period for interest		$	15,332			11,150
Non-cash investing activities
Transfers to repossessed assets		$	453		$	358

(1)

Reclassified to conform to the current period's presentation.

See Notes to the Unaudited Consolidated Financial Statements.

83

CITIBANK, N.A. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

In millions of dollars, except shares		March 31, 2007 (Unaudited)			December 31, 2006(1)
Assets
Cash and due from banks		$	17,516		$	18,917
Deposits with banks			40,777			38,377
Federal funds sold and securities purchased under agreements to resell			10,869			9,219
Trading account assets (including $241 and $117 pledged to creditors at March 31, 2007 and December 31, 2006, respectively)			105,980			103,945
Investments (including $2,154 and $1,953 pledged to creditors at March 31, 2007 and December 31, 2006, respectively)			227,860			215,222
Loans, net of unearned income			579,223			558,952
	Allowance for loan losses		(5,854	)		(5,152	)
Total loans, net		$	573,369		$	553,800
Goodwill			14,938			13,799
Intangible assets			10,631			6,984
Premises and equipment, net			7,235			7,090
Interest and fees receivable			8,054			7,354
Other assets			59,720			44,790
Total assets		$	1,076,949		$	1,019,497
Liabilities
	Non-interest-bearing deposits in U.S. offices	$	39,463		$	38,663
	Interest-bearing deposits in U.S. offices		165,774			167,015
	Non-interest-bearing deposits in offices outside the U.S.		32,762			31,169
	Interest-bearing deposits in offices outside the U.S.		452,806			428,896
Total deposits		$	690,805		$	665,743
Trading account liabilities			44,774			43,136
Purchased funds and other borrowings			90,784			73,081
Accrued taxes and other expense			10,448			10,777
Long-term debt and subordinated notes			124,139			115,833
Other liabilities			38,697			37,774
Total liabilities		$	999,647		$	946,344
Stockholder's equity
Capital stock ($20 par value) outstanding shares: 37,534,553 in each period		$	751		$	751
Surplus			45,794			43,753
Retained earnings			32,399			30,358
Accumulated other comprehensive income (loss)(2)			(1,642	)		(1,709	)
Total stockholder's equity		$	77,302		$	73,153
Total liabilities and stockholder's equity		$	1,076,949		$	1,019,497

(1)

Reclassified to conform to the current period's presentation.

(2)

Amounts at March 31, 2007 and December 31, 2006 include the after-tax amounts for net unrealized gains/(losses) on investment securities of $10 million and ($119) million, respectively, for foreign currency translation of ($315) million and ($456) million, respectively, for cash flow hedges of ($401) million and ($131) million, respectively, and for additional minimum pension liability of ($936) million and ($1.003) billion, respectively.

See Notes to the Unaudited Consolidated Financial Statements.

84

CITIGROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1.     Basis of Presentation

        The accompanying unaudited consolidated financial statements as of March 31, 2007 and for the three-month period ended March 31, 2007 include the accounts of Citigroup Inc. (Citigroup) and its subsidiaries (collectively, the Company). In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation, have been reflected. The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in Citigroup's 2006 Annual Report on Form 10-K.

        Certain financial information that is normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles, but is not required for interim reporting purposes, has been condensed or omitted.

        Management must make estimates and assumptions that affect the Consolidated Financial Statements and the related footnote disclosures. While management makes its best judgment, actual results could differ from those estimates.

        Certain reclassifications have been made to the prior-period's financial statements to conform to the current period's presentation.

Significant Accounting Policies

        The Company's accounting policies are fundamental to understanding management's discussion and analysis of results of operations and financial condition. The Company has identified five policies as being significant because they require management to make subjective and/or complex judgments about matters that are inherently uncertain. These policies relate to Valuations of Financial Instruments, Allowance for Credit Losses, Securitizations, Income Taxes and Legal Reserves. The Company, in consultation with the Audit and Risk Management Committee of the Board of Directors, has reviewed and approved these significant accounting policies, which are further described in the Company's 2006 Annual Report on Form 10-K.

Accounting Changes

Fair Value Measurements (SFAS 157)

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

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

        See Note 16 on page 105 for additional information.

Fair Value Option (SFAS 159)

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

        The adoption of SFAS 159 resulted in a decrease to January 1, 2007 retained earnings of $99 million.

        See Note 16 on page 105 for additional information.

Accounting for Uncertainty in Income Taxes

        In July 2006, the FASB issued FIN 48, "Accounting for Uncertainty in Income Taxes" (FIN 48), which sets out a framework for preparers to use to determine the appropriate level of tax reserves to maintain for uncertain tax positions. This interpretation of FASB Statement No. 109 uses a two-step approach wherein a tax benefit is recognized if a position is more likely than not to be sustained. The amount of the benefit is then measured to be the highest tax benefit that is greater than 50 percent likely to be realized. FIN 48 also sets out disclosure requirements to enhance transparency of an entity's tax reserves.

85

        Citigroup adopted FIN 48 as of January 1, 2007 that resulted in a decrease to January 1, 2007 retained earnings of $14 million.

        The total unrecognized tax benefits as of January 1, 2007 is $3.1 billion. There was no material change to this balance during the first quarter of 2007. The total amount of unrecognized tax benefits as of January 1, 2007 that would affect the effective tax rate is $1.0 billion. The remaining $2.1 billion represents temporary differences or amounts for which offsetting deductions or credits are available in a different taxing jurisdiction. The total amount of interest and penalties recognized in the Consolidated Balance Sheet at January 1, 2007 is approximately $510 million ($320 million net of tax). There was no material change to this balance during the first quarter of 2007. The Company classifies interest and penalties as income tax expense. The Company is currently under audit by the IRS and other major taxing jurisdictions around the world. It is thus reasonably possible that significant changes in the gross balance of unrecognized tax benefits may occur within the next 12 months (an estimate of the range of such gross changes cannot be made), but the Company does not expect such audits to result in amounts that would cause a significant change to its effective tax rate.

        The following are the major tax jurisdictions in which the Company and its affiliates operate and the earliest tax year subject to examination:

Jurisdiction	Tax year
United States	2003
Mexico	2004
New York State and City	2005	(1)
United Kingdom	1998
Germany	2000
Korea	2001

(1)

During the first quarter of 2007, one of the major filing groups completed an audit for 2001—2004.

Leveraged Leases

        On January 1, 2007, the Company adopted FASB Staff Position, "Accounting for a Change or Projected Change in the Timing of Cash Flows Relating to Income Taxes Generated by a Leverage Lease Transaction" (FSP 13-2), which provides guidance regarding changes or projected changes in the timing of cash flows relating to income taxes generated by a leveraged lease transaction.

        Leveraged leases can provide significant tax benefits to the lessor, primarily as a result of the timing of tax payments. Since changes in the timing and/or amount of these tax benefits may have a significant effect on the cash flows of a lease transaction, a lessor, in accordance with FSP 13-2, will be required to perform a recalculation of a leveraged lease when there is a change or projected change in the timing of the realization of tax benefits generated by that lease. Previously, Citigroup did not recalculate the tax benefits if only the timing of cash flows has changed.

        The adoption of FSP 13-2 resulted in a decrease to January 1, 2007 retained earnings of $148 million. This decrease to retained earnings will be recognized in earnings over the remaining lives of the leases as tax benefits are realized.

Stock-Based Compensation

        On January 1, 2006, the Company adopted SFAS No. 123 (revised 2004),"Share-Based Payment" (SFAS 123(R)), which replaced the existing SFAS 123 and APB 25,"Accounting for Stock Issued to Employees." SFAS 123(R) requires companies to measure compensation expense for stock options and other share-based payments based on the instruments' grant date fair value, and to record expense based on that fair value reduced by expected forfeitures.

        The Company maintains a number of incentive programs in which equity awards are granted to eligible employees. The most significant of the programs offered is the Capital Accumulation Program (CAP). Under the CAP program, the Company grants deferred and restricted shares to eligible employees. The program provides that employees who meet certain age plus years-of-service requirements (retirement-eligible employees) may terminate active employment and continue vesting in their awards provided they comply with specified non-compete provisions. For awards granted to retirement-eligible employees prior to the adoption of SFAS 123(R), the Company has been and will continue to amortize the compensation cost of these awards over the full vesting periods. Awards granted to retirement-eligible employees after the adoption of SFAS 123(R) must be either expensed on the grant date or accrued in the year prior to the grant date.

        The impact to 2006 was a charge of $648 million ($398 million after-tax) for the immediate expensing of awards granted to retirement-eligible employees in January 2006, and $824 million ($526 million after-tax) for the accrual of the awards that were granted in January 2007.

        In adopting SFAS 123(R), the Company began to recognize compensation expense for restricted or deferred stock awards net of estimated forfeitures. Previously, the effects of forfeitures were recorded as they occurred.

Accounting for Certain Hybrid Financial Instruments

        On January 1, 2006, the Company elected to early-adopt, primarily on a prospective basis, SFAS No. 155,"Accounting for Certain Hybrid Financial Instruments" (SFAS 155). In accordance with this standard, hybrid financial instruments—such as structured notes containing embedded derivatives that otherwise would require bifurcation, as well as interest-only instruments—may be accounted for at fair value if the Company makes an irrevocable election to do so on an instrument-by-instrument basis. The changes in fair value are recorded in current earnings. The impact of adopting this standard was not material.

86

Accounting for Servicing of Financial Assets

        On January 1, 2006, the Company elected to early-adopt SFAS No. 156," Accounting for Servicing of Financial Assets"(SFAS 156). This pronouncement requires all servicing rights to be initially recognized at fair value. Subsequent to initial recognition, it permits a one-time irrevocable election to remeasure each class of servicing rights at fair value, with the changes in fair value being recorded in current earnings. The classes of servicing rights are identified based on the availability of market inputs used in determining their fair values and the methods for managing their risks. The Company has elected fair value accounting for its mortgage and student loan classes of servicing rights. The impact of adopting this standard was not material.

Future Application of Accounting Standards

Potential Amendments to Various Current Accounting Standards

        The FASB is currently working on amendments to the existing accounting standards governing asset transfers and fair value measurements in business combinations and impairment tests. Upon completion of these standards, the Company will need to reevaluate its accounting and disclosures. Due to the ongoing deliberations of the standard setters, the Company is unable to accurately determine the effect of future amendments or proposals at this time.

2.     Discontinued Operations

Sale of the Asset Management Business

        On December 1, 2005, the Company completed the sale of substantially all of its Asset Management Business, which had total assets of approximately $1.4 billion and liabilities of approximately $0.6 billion at the closing date, to Legg Mason, Inc. (Legg Mason) in exchange for Legg Mason's broker-dealer and capital markets businesses, $2.298 billion of Legg Mason's common and preferred shares (valued as of the closing date), and $500 million in cash. This cash was obtained via a lending facility provided by Citigroup Markets & Banking business. The transaction did not include Citigroup's asset management business inMexico, its retirement services business inLatin America (both of which are included inInternational Retail Banking) or its interest in the CitiStreet joint venture (which is included inSmith Barney). The total value of the transaction at the time of closing was approximately $4.369 billion, resulting in an after-tax gain to Citigroup of approximately $2.082 billion ($3.404 billion pretax, which was reported in discontinued operations).

        Concurrently, Citigroup sold Legg Mason's capital markets business to Stifel Financial Corp. The business consisted of areas in which Citigroup already had full capabilities, including investment banking, institutional equity sales and trading, taxable fixed income sales and trading, and research. No gain or loss was recognized from this transaction. (The transactions described in these two paragraphs are referred to as the "Sale of the Asset Management Business.")

        In connection with this sale, Citigroup and Legg Mason entered into a three-year agreement under which Citigroup will continue to offer its clients Asset Management's products, will become the primary retail distributor of the Legg Mason funds managed by Legg Mason Capital Management Inc., and may also distribute other Legg Mason products. These products will be offered primarily through Citigroup's Global Wealth Management businesses,Smith Barney andPrivate Bank, as well as through Primerica and Citibank. The distribution of these products will be subject to applicable requirements of law and Citigroup's suitability standards and product requirements.

        Upon completion of the Sale of the Asset Management Business, Citigroup added 1,226 financial advisors in 124 branch offices to its Global Wealth Management Business.

        On January 31, 2006, the Company completed the sale of its Asset Management Business within Bank Handlowy (an indirect banking subsidiary of Citigroup located in Poland) to Legg Mason. This transaction, which was originally part of the overall Asset Management Business sold to Legg Mason Inc. on December 1, 2005, was postponed due to delays in obtaining local regulatory approval. A gain from this sale of $18 million after-tax and minority interest ($31 million pretax and minority interest) was recognized in the first quarter of 2006 within discontinued operations.

        During March 2006, the Company sold 10.3 million shares of Legg Mason stock through an underwritten public offering. The net sale proceeds of $1.258 billion resulted in a pretax gain of $24 million in Alternative Investments.

        In September 2006, the Company received from Legg Mason the final closing adjustment payment related to this sale. This payment resulted in an additional after-tax gain of $51 million ($83 million pretax), recorded in discontinued operations.

        Results for all of the businesses included in the Sale of the Asset Management Business, including the gain, are reported as discontinued operations for all periods presented. In connection with the adoption of SFAS 159, changes in the market value of the Legg Mason shares are recorded in Trading account assets and in current earnings. Prior to the adoption of this pronouncement, changes in the market value of the Legg Mason shares were included in the Consolidated Statement of Changes in Stockholders' Equity within Accumulated other comprehensive income (net change in unrealized gains and losses on investment securities, net of taxes). Any effects on the Company's current earnings related to these securities, such as dividend revenue, are included in the results of Alternative Investments.

        The following is summarized financial information for discontinued operations related to the Sale of the Asset Management Business:

	Three Months Ended March 31,
In millions of dollars	2007		2006
Total revenues, net of interest expense	$	—	$	21
Income (loss) from discontinued operations	$	—	$	(1	)
Gain on sale		—		21
Provision for income taxes and minority interest, net of taxes		—		10
Income from discontinued operations, net of taxes	$	—	$	10

87

Sale of the Life Insurance & Annuities Business

        On July 1, 2005, the Company completed the sale of Citigroup's Travelers Life & Annuity and substantially all of Citigroup's international insurance businesses to MetLife, Inc. (MetLife). The businesses sold were the primary vehicles through which Citigroup engaged in the Life Insurance & Annuities Business, which had total assets of approximately $93.2 billion and liabilities of approximately $83.8 billion.

        Citigroup received $1.0 billion in MetLife equity securities and $10.830 billion in cash, which resulted in an after-tax gain of approximately $2.120 billion ($3.386 billion pretax), which was reported in discontinued operations.

        This transaction encompassed Travelers Life & Annuity's U.S. businesses and its international operations other than Citigroup's life insurance business inMexico (which is now included withinInternational Retail Banking). International operations included wholly owned insurance companies in the United Kingdom, Belgium, Australia, Brazil, Argentina, and Poland; joint ventures in Japan and Hong Kong; and offices in China. This transaction also included Citigroup's Argentine pension business. (The transaction described in the preceding three paragraphs is referred to as the "Sale of the Life Insurance & Annuities Business.")

        In connection with the Sale of the Life Insurance & Annuities Business, Citigroup and MetLife entered into 10-year agreements under which Travelers Life & Annuity and MetLife products will be made available through certain Citigroup distribution channels.

        During the first quarter of 2006, $15 million of the total $657 million federal tax contingency reserve release was reported within discontinued operations as it related to the Life Insurance & Annuities Business sold to MetLife.

        In July 2006, Citigroup recognized an $85 million after-tax gain from the sale of MetLife shares. This gain was reported within income from continuing operations in the Alternative Investments business.

        In July 2006, the Company received the final closing adjustment payment related to this sale, resulting in an after-tax gain of $75 million ($115 million pretax), which was recorded in discontinued operations.

        In addition, during the 2006 third quarter, a release of $42 million of deferred tax liabilities was reported within discontinued operations as it related to the Life Insurance & Annuities Business sold to MetLife.

        Results for all of the businesses included in the Sale of the Life Insurance & Annuities Business are reported as discontinued operations for all periods presented.

        Summarized financial information for discontinued operations related to the Sale of the Life Insurance & Annuities Business is as follows:

	Three Months Ended March 31,
In millions of dollars	2007		2006
Total revenues, net of interest expense	$	—	$	—
Income from discontinued operations	$	—	$	2
Provision (benefit) for income taxes		—		(28	)
Income from discontinued operations, net of taxes	$	—	$	30

The Spin-Off of Travelers Property Casualty Corp. (TPC)

        During the first quarter of 2006, releases from various tax contingency reserves were recorded as the IRS concluded their tax audits for the years 1999 through 2002. Included in these releases was $44 million related to Travelers Property Casualty Corp., which the Company spun off during 2002. This release has been included in the provision for income taxes within the results for discontinued operations.

Combined Results for Discontinued Operations

        Summarized financial information for the Life Insurance and Annuities Business, the Asset Management Business, and Travelers Property Casualty Corp. is as follows:

	Three Months Ended March 31,
In millions of dollars	2007		2006
Total revenues, net of interest expense	$	—	$	21
Income from discontinued operations	$	—	$	1
Gain on sale		—		21
Provision (benefit) for income taxes and minority interest, net of taxes		—		(62	)
Income from discontinued operations, net of taxes	$	—	$	84

88

3.     Business Segments

        The following table presents certain information regarding the Company's continuing operations by segment:

	Revenues, Net of Interest Expense					Provision (Benefit) for Income Taxes						Income (Loss) from Continuing Operations(1)						Identifiable Assets
In millions of dollars, except identifiable assets in billions	First Quarter																	Mar. 31,		Dec. 31,
	2007		2006			2007			2006(2)			2007			2006(2)			2007		2006
Global Consumer	$	13,106	$	11,955		$	1,017		$	847		$	2,633		$	3,073		$	736	$	702
Markets & Banking		8,957		7,279			947			574			2,621			1,929			1,180		1,078
Global Wealth Management		2,818		2,483			251			136			448			287			70		66
Alternative Investments		562		675			138			111			222			353			12		12
Corporate/Other(3)		16		(209	)		(491	)		(131	)		(912	)		(87	)		23		26
Total	$	25,459	$	22,183		$	1,862		$	1,537		$	5,012		$	5,555		$	2,021	$	1,884

(1)

Includes pretax provisions (credits) for credit losses and for benefits and claims in the Global Consumer results of $2.7 billion and $1.7 billion and in the Global Wealth Management results of $17 million and $5 million for the 2007 and 2006 first quarters, respectively. Markets & Banking results and Alternative Investments results include a pretax provision of $263 million and $1 million, respectively, for the first quarter of 2007.

(2)

The effective tax rates for the first quarter of 2006 reflect the impact of the resolution of the Federal Tax Audit.

(3)

Corporate/Other reflects restructuring charge of $1.377 billion in the 2007 first quarter. Of this total charge, $942 million is attributable to Global Consumer; $277 million to Markets & Banking; $55 million to Global Wealth Management; $7 million to Alternative Investments; and $96 million to Corporate/Other. See Note 7 on page 92 for further discussions.

89

4.     Interest Revenue and Expense

        For the three-month periods ending March 31, 2007 and 2006, interest revenue and expense consisted of the following:

	Three Months Ended March 31,
In millions of dollars	2007		2006(1)
Interest revenue
Loan interest, including fees	$	14,935	$	12,818
Deposits with banks		709		489
Federal funds sold and securities purchased under agreements to resell		4,289		3,205
Investments, including dividends		3,540		2,056
Trading account assets(2)		3,930		2,700
Other interest		729		605
Total interest revenue	$	28,132	$	21,873
Interest expense
Deposits	$	6,558	$	4,505
Trading account liabilities(2)		307		243
Short-term debt and other liabilities		6,947		4,864
Long-term debt		3,750		2,495
Total interest expense	$	17,562	$	12,107
Net interest revenue	$	10,570	$	9,766
Provision for loan losses		2,706		1,396
Net interest revenue after provision for loan losses	$	7,864	$	8,370

(1)

Reclassified to conform to the current period's presentation.

(2)

Interest expense on Trading account liabilities of Markets & Banking is reported as a reduction of interest revenue from Trading account assets.

5.     Commissions and Fees

        Commissions and fees revenue includes charges to customers for credit and bank cards, including transaction-processing fees and annual fees; advisory, and equity and debt underwriting services; lending and deposit-related transactions, such as loan commitments, standby letters of credit, and other deposit and loan servicing activities; investment management-related fees including brokerage services, and custody and trust services; insurance fees and commissions.

        The following table presents commissions and fees revenue for the three-month periods ended March 31,

In millions of dollars	2007		2006(1)
Credit cards and bank cards	$	1,270	$	1,266
Investment banking		1,561		1,010
Smith Barney		774		717
Markets & Banking trading-related		686		655
Checking-related		287		248
Transaction services		231		209
Corporate finance		295		170
Loan servicing(2)		261		568
Primerica		116		96
Other Consumer		216		159
Other Markets & Banking		57		56
Other		19		34
Total commissions and fees	$	5,773	$	5,188

(1)

Reclassified to conform to the current period's presentation.

(2)

Includes fair value adjustments on mortgage servicing assets.

90

6.     Retirement Benefits

        The Company has several non-contributory defined benefit pension plans covering substantially all U.S. employees and has various defined benefit pension and termination indemnity plans covering employees outside the United States. The U.S. defined benefit plan provides benefits under a cash balance formula. Employees satisfying certain age and service requirements remain covered by a prior final pay formula. The Company also offers postretirement health care and life insurance benefits to certain eligible U.S. retired employees, as well as to certain eligible employees outside the United States. For information on the Company's Retirement Benefit Plans and Pension Assumptions, see Citigroup's 2006 Annual Report on Form 10-K.

        The following table summarizes the components of the net expense recognized in the Consolidated Statement of Income for the three months ended March 31, 2007 and 2006.

Net Expense

		Three Months Ended March 31,
		Pension Plans												Postretirement Benefit Plans
		U.S. Plans(1) (2)						Plans Outside U.S.						U.S. Plans						Plans Outside U.S.
In millions of dollars		2007			2006			2007			2006			2007			2006			2007			2006
Benefits earned during the period		$	67		$	68		$	44		$	43		$	1		$	1		$	6		$	4
Interest cost on benefit obligation			163			157			74			68			15			16			18			14
Expected return on plan assets			(222	)		(212	)		(107	)		(84	)		(3	)		(3	)		(24	)		(14	)
Amortization of unrecognized:
	Net transition obligation		—			—			1			—			—			—			—			—
	Prior service cost		(1	)		(6	)		—			1			(1	)		(1	)		—			—
	Net actuarial loss		27			44			13			14			1			3			2			2
Net expense		$	34		$	51		$	25		$	42		$	13		$	16		$	2		$	6

(1)

The U.S. plans exclude nonqualified pension plans, for which the net expense was $12 million and $14 million for the three months ended March 31, 2007 and 2006, respectively.

(2)

In 2006, the Company announced that commencing January 1, 2008, the U.S. qualified pension plan would be frozen. Accordingly, no additional contributions would be credited to the cash balance plan for existing plan participants. However, employees still covered under the prior final pay plan will continue to accrue benefits.

Employer Contributions

        Citigroup's pension funding policy for U.S. plans and non-U.S. plans is generally to fund to applicable minimum funding requirements, rather than to the amounts of accumulated benefit obligations. For the U.S. plans, the Company may increase its contributions above the minimum required contribution under the Employee Retirement Income Security Act of 1974 (ERISA), if appropriate to its tax and cash position and the plan's funded position. At March 31, 2007 and December 31, 2006, there were no minimum required contributions and no discretionary cash or non-cash contributions are currently planned for the U.S. plans. For the non-U.S. plans, the Company contributed $43 million as of March 31, 2007. Citigroup presently anticipates contributing an additional $120 million to fund its non-U.S. plans in 2007 for a total of $163 million.

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7.     Restructuring

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

        The primary goals of the 2007 Structural Expense Review are as follow:

•

Eliminate layers of management/improve workforce management;



•

Consolidate certain back-office, middle-office and corporate functions;



•

Increase the use of shared services;



•

Expand centralized procurement; and



•

Continue to rationalize operational spending on technology.

        In March 2007, Citigroup recorded a pre-tax restructuring charge of $1.377 billion in accordance with SFAS No. 146,"Accounting for Costs Associated with Exit or Disposal Activities" (SFAS 146). This pronouncement permits charges recorded under other accounting standards to be presented along with those recorded under SFAS 146 in a separate line, Restructuring expense, on the Consolidated Statement of Income, provided those costs are incurred in connection with a restructuring event. The charge included $961 million related to employee severance, of which $950 million is accounted for in accordance with SFAS No. 112,"Employer's Accounting for Post Employment Benefits" (SFAS 112), and $11 million accounted for in accordance with SFAS 146, $352 million related to the write-down to estimated salvage value of assets available for disposal accounted for in accordance with SFAS No. 144,"Accounting for the Impairment or Disposal of Long-Lived Assets" (SFAS 144), $25 million related to exiting leasehold and other contractual obligations, and $39 million related to other costs (including employee termination costs). The severance costs reflect the accrual to eliminate approximately 17,300 positions, after considering attrition and redeployment within the Company.

        The implementation of these restructuring initiatives also caused certain related premises and equipment assets to become redundant. The remaining depreciable lives of these assets were shortened, and accelerated depreciation charges will begin in the second quarter of 2007 in addition to normal scheduled depreciation.

        Additional charges totaling approximately $200 million, pre-tax, are anticipated to be recorded by the end of 2007.

        Separate from the restructuring charge, additional implementation costs related to these initiatives of approximately $100 million pretax are expected throughout 2007.

        The status of the 2007 Structural Expense Review is summarized in the following table:

Restructuring Reserve Activity

In millions of dollars
Original restructuring charge	$	1,377
First quarter 2007 utilization		(268	)
Reserve balance at March 31, 2007	$	1,109

        The utilization of the 2007 restructuring reserve resulted from non-cash charges related to the write-off of assets, primarily intangible assets.

92

8.     Earnings Per Share

        The following is a reconciliation of the income and share data used in the basic and diluted earnings per share computations for the three months ended March 31, 2007 and 2006:

In millions, except per share amounts	March 31, 2007			March 31, 2006
Income from continuing operations	$	5,012		$	5,555
Discontinued operations		—			84
Preferred dividends		(16	)		(16	)
Income available to common stockholders for basic EPS		4,996			5,623
Effect of dilutive securities		—			—
Income available to common stockholders for diluted EPS	$	4,996		$	5,623
Weighted average common shares outstanding applicable to basic EPS		4,877.0			4,920.7
Effect of dilutive securities:
Options		26.7			27.3
Restricted and deferred stock		64.2			59.9
Adjusted weighted average common shares outstanding applicable to diluted EPS		4,967.9			5,007.9
Basic earnings per share(1)
Income from continuing operations	$	1.02		$	1.13
Discontinued operations		—			0.02
Net income	$	1.02		$	1.14
Diluted earnings per share(1)
Income from continuing operations	$	1.01		$	1.11
Discontinued operations		—			0.02
Net income	$	1.01		$	1.12

(1)

Due to rounding, earnings per share on continuing and discontinued operations may not sum to earnings per share on net income.

9.     Trading Account Assets and Liabilities

        Trading account assets and liabilities, at fair value, consisted of the following:

In millions of dollars	March 31, 2007		December 31, 2006
Trading account assets
U.S. Treasury and federal agency securities	$	60,885	$	44,661
State and municipal securities		17,099		17,358
Foreign government securities		46,978		33,057
Corporate and other debt securities		98,771		93,891
Derivatives(1)		46,466		49,541
Equity securities		106,203		92,518
Mortgage loans and collateralized mortgage securities		45,814		37,104
Other		37,849		25,795
Total trading account assets	$	460,065	$	393,925
Trading account liabilities
Securities sold, not yet purchased	$	99,711	$	71,083
Derivatives(1)		74,191		74,804
Total trading account liabilities	$	173,902	$	145,887

(1)

Pursuant to master netting agreements and cash collateral.

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10.   Goodwill and Intangible Assets

        The changes in goodwill during the first three months of 2007 were as follows:

In millions of dollars	Goodwill
Balance at December 31, 2006	$	33,415
Acquisition of Grupo Financiero Uno		865
Acquisition of Quilter		268
Foreign exchange translation and other		(168	)
Balance at March 31, 2007	$	34,380

        During the first quarter of 2007, no goodwill was written off due to impairment.

        The changes in intangible assets during the first three months of 2007 were as follows:

In millions of dollars	Net Carrying Amount at December 31, 2006		Acquisitions		Amortization			FX & Other(1)			Impairments(2)			Net Carrying Amount at March 31, 2007
Purchased credit card relationships	$	4,879	$	92	$	(151	)	$	7		$	(35	)	$	4,792
Core deposit intangibles		734		45		(22	)		14			—			771
Other customer relationships		389		—		(16	)		(23	)		(127	)		223
Present value of future profits		181		—		(1	)		—			—			180
Indefinite-lived intangible assets		639		—		—			(5	)		(73	)		561
Other		3,640		387		(62	)		6			—			3,971
Intangible assets carried at fair value(3)		5,439		3,119		—			274			—			8,832
Total intangible assets	$	15,901	$	3,643	$	(252	)	$	273		$	(235	)	$	19,330

(1)

Includes foreign exchange translation as well as purchase accounting adjustments.

(2)

The impairment loss was determined based on a discounted cash flow model as a result of the 2007 Structural Expense Review and is included in Restructuring expense on the Consolidated Statement of Income.

(3)

Relates to mortgage servicing rights.

        The components of intangible assets were as follows:

	March 31, 2007						December 31, 2006
In millions of dollars	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Purchased credit card relationships	$	8,488	$	3,696	$	4,792	$	8,391	$	3,512	$	4,879
Core deposit intangibles		1,295		524		771		1,223		489		734
Other customer relationships		860		637		223		1,044		655		389
Present value of future profits		427		247		180		428		247		181
Other(1)		4,836		865		3,971		4,445		805		3,640
Total amortizing intangible assets	$	15,906	$	5,969	$	9,937	$	15,531	$	5,708	$	9,823
Indefinite-lived intangible assets		561		N/A		561		639		N/A		639
Intangible assets carried at fair value(2)	$	8,832		N/A		8,832	$	5,439		N/A		5,439
Total intangible assets	$	25,299	$	5,969	$	19,330	$	21,609	$	5,708	$	15,901

(1)

Includes contract-related intangible assets

(2)

Represents mortgage servicing rights.

N/A

Not applicable

94

11.   Investments

In millions of dollars	March 31, 2007		December 31, 2006
Fixed income securities, substantially all available-for-sale at fair value	$	266,399	$	254,107
Equity securities		20,131		19,447
Other		37		37
Total	$	286,567	$	273,591

        The amortized cost and fair value of investments in fixed income and equity securities at March 31, 2007 and December 31, 2006 were as follows:

	March 31, 2007								December 31, 2006(1)(2)
In millions of dollars	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Amortized Cost		Fair Value
Fixed income securities held to maturity(3)	$	1	$	—	$	—	$	1	$	1	$	1
Fixed income securities available-for-sale
Mortgage-backed securities, principally obligations of U.S. Federal agencies	$	89,051	$	268	$	231	$	89,088	$	82,443	$	82,413
U.S. Treasury and Federal agencies		22,616		16		239		22,393		24,872		24,531
State and municipal		18,054		436		34		18,456		15,152		15,654
Foreign government		81,069		579		479		81,169		73,943		73,783
U.S. corporate		32,407		312		227		32,492		32,311		32,455
Other debt securities		22,758		78		36		22,800		25,071		25,270
Total fixed income securities available-for-sale(4)	$	265,956	$	1,689	$	1,246	$	266,399	$	253,793	$	254,107
Equity securities(5)(6)	$	18,882	$	1,252	$	3	$	20,131	$	18,477	$	19,447

(1)

At December 31, 2006, gross pretax unrealized gains and losses on fixed income and equity securities totaled $3.225 billion and $1.941 billion, respectively.

(2)

Reclassified to conform to the current period's presentation.

(3)

Recorded at amortized cost.

(4)

Includes fixed income securities, held to maturity.

(5)

Includes non-marketable equity securities carried at fair value of $10.662 billion and $10.538 billion at March 31, 2007 and December 31, 2006, respectively. The related gross unrealized gains and losses were recognized in earnings and are not included in the table above. Also, includes non-marketable equity securities carried at cost of $5.784 billion and $4.804 billion at March 31, 2007 and December 31, 2006, respectively, which are reported in both the amortized cost and fair value columns.

(6)

The Legg Mason securities were previously reported at fair value within equity securities and changes in value were reported in Accumulated other comprehensive income (loss). Upon election of fair value accounting with the adoption of SFAS 159 as of January 1, 2007, the unrealized loss on these securities was reclassified to retained earnings and the shares are now included in Trading account assets in accordance with SFAS 159. See Note 14 and Note 16 on pages 102 and 105, respectively, for further discussions.

        Citigroup invests in certain complex investment company structures known as Master-Feeder funds by making direct investments in the Feeder funds. Each Feeder fund records its net investment in the Master fund, which is the sole or principal investment of the Feeder fund, and does not consolidate the Master Fund. Citigroup consolidates Feeder funds where it has a controlling interest. At March 31, 2007, the total assets of Citigroup's consolidated Feeder funds amounted to approximately $3.6 billion. Citigroup has not consolidated approximately $8.0 billion of additional assets and liabilities recorded in the related Master Funds' financial statements.

12.   Debt

        Short-term borrowings consist of commercial paper and other short-term borrowings as follows:

In millions of dollars		March 31, 2007		December 31, 2006
Commercial paper
	Citigroup Funding Inc.	$	39,745	$	41,767
	Other Citigroup Subsidiaries		866		1,928
		$	40,611	$	43,695
Other short-term borrowings(1)			70,568		57,138
Total short-term borrowings		$	111,179	$	100,833

(1)

At March 31, 2007, collateralized advances from the Federal Home Loan Bank are $6.5 billion.

        Borrowings under bank lines of credit may be at interest rates based on LIBOR, CD rates, the prime rate, or bids submitted by the banks. Citigroup pays commitment fees for its lines of credit.

        Some of Citigroup's nonbank subsidiaries have credit facilities with Citigroup's subsidiary depository institutions, including Citibank, N.A. Borrowings under these facilities must be collateralized in accordance with Section 23A of the Federal Reserve Act.

95

        Long-term debt, including its current portion, consisted of the following:

In millions of dollars	March 31, 2007		December 31, 2006
Citigroup Parent Company	$	134,915	$	125,350
Other Citigroup Subsidiaries(1)		122,969		115,578
Citigroup Global Markets Holdings Inc.(2)		28,419		28,719
Citigroup Funding Inc.(3)(4)		24,465		18,847
Total long-term debt	$	310,768	$	288,494

(1)

At March 31, 2007, and December 31, 2006, collateralized advances from the Federal Home Loan Bank are $87.6 billion and $81.5 billion, respectively.

(2)

Includes Targeted Growth Enhanced Term Securities (TARGETS) with carrying values of $186 million issued by TARGETS Trusts XXI through XXIV and $243 million issued by TARGETS Trusts XX through XXIV at March 31, 2007 and December 31, 2006, respectively (collectively, the "CGMHI Trusts"). CGMHI owns all of the voting securities of the CGMHI Trusts. The CGMHI Trusts have no assets, operations, revenues or cash flows other than those related to the issuance, administration, and repayment of the TARGETS and the CGMHI Trusts' common securities. The CGMHI Trusts' obligations under the TARGETS are fully and unconditionally guaranteed by CGMHI, and CGMHI's guarantee obligations are fully and unconditionally guaranteed by Citigroup.

(3)

Includes Targeted Growth Enhanced Term Securities (CFI TARGETS) with carrying values of $56 million issued by TARGETS Trusts XXV and XXVI at both March 31, 2007 and December 31, 2006 (collectively, the "CFI Trusts"). CFI owns all of the voting securities of the CFI Trusts. The CFI Trusts have no assets, operations, revenues or cash flows other than those related to the issuance, administration, and repayment of the CFI TARGETS and the CFI Trusts' common securities. The CFI Trusts' obligations under the CFI TARGETS are fully and unconditionally guaranteed by CFI, and CFI's guarantee obligations are fully and unconditionally guaranteed by Citigroup.

(4)

Includes Principal-Protected Trust Securities (Safety First Trust Securities) with carrying values of $154 million issued by Safety First Trust Series 2006-1 and 2007-1 and $78 million issued by Safety First Trust Series 2006-1 (collectively, the "Safety First Trusts") at March 31, 2007 and December 31, 2006, respectively. CFI owns all of the voting securities of the Safety First Trusts. The Safety First Trusts have no assets, operations, revenues or cash flows other than those related to the issuance, administration, and repayment of the Safety First Trust Securities and the Safety First Trusts' common securities. The Safety First Trusts' obligations under the Safety First Trust Securities are fully and unconditionally guaranteed by CFI, and CFI's guarantee obligations are fully and unconditionally guaranteed by Citigroup.

        CGMHI has a syndicated five-year committed uncollateralized revolving line of credit facility with unaffiliated banks totaling $3.0 billion, which matures in 2011. CGMHI also has three-year bilateral facilities totaling $575 million with unaffiliated banks with borrowings maturing on various dates in 2009. At March 31, 2007 there were no outstanding borrowings under these facilities.

        CGMHI also has committed long-term financing facilities with unaffiliated banks. At March 31, 2007, CGMHI had drawn down the full $1.78 billion available under these facilities, of which $1.08 billion is guaranteed by Citigroup. A bank can terminate these facilities by giving CGMHI prior notice (generally one year). CGMHI also has substantial borrowing arrangements consisting of facilities that CGMHI has been advised are available, but where no contractual lending obligation exists. These arrangements are reviewed on an ongoing basis to ensure flexibility in meeting CGMHI's short-term requirements.

        The Company issues both fixed and variable rate debt in a range of currencies. It uses derivative contracts, primarily interest rate swaps, to effectively convert a portion of its fixed rate debt to variable rate debt and variable rate debt to fixed rate debt. The maturity structure of the derivatives generally corresponds to the maturity structure of the debt being hedged. In addition, the Company uses other derivative contracts to manage the foreign exchange impact of certain debt issuances.

        Long-term debt at March 31, 2007 and December 31, 2006 includes $9,601 million and $9,775 million, respectively, of junior subordinated debt. The Company formed statutory business trusts under the laws of the state of Delaware, which exist for the exclusive purposes of (i) issuing Trust Securities representing undivided beneficial interests in the assets of the Trust; (ii) investing the gross proceeds of the Trust securities in junior subordinated deferrable interest debentures (subordinated debentures) of its parent; and (iii) engaging in only those activities necessary or incidental thereto. Upon approval from the Federal Reserve, Citigroup has the right to redeem these securities.

        Citigroup has contractually agreed not to redeem or purchase (i) the 6.50% Enhanced Trust Preferred Securities of Citigroup Capital XV before September 15, 2056, (ii) the 6.45% Enhanced Trust Preferred Securities of Citigroup Capital XVI before December 31, 2046 and (iii) the 6.35% Enhanced Trust Preferred Securities of Citigroup Capital XVII before March 15, 2057 unless certain conditions, described in Exhibit 4.03 to Citigroup's Current Report on Form 8-K filed on September 18, 2006, in Exhibit 4.02 to Citigroup's Current Report on Form 8-K filed on November 28, 2006 and in Exhibit 4.02 to Citigroup's Current Report on Form 8-K filed on March 8, 2007, respectively, are met. These agreements are for the benefit of the holders of Citigroup's 6.00% Junior Subordinated Deferrable Interest Debentures due 2034.

        For Regulatory Capital purposes, these Trust Securities remain a component of Tier 1 Capital. See "Capital Resources and Liquidity" on page 68.

        Citigroup owns all of the voting securities of these subsidiary trusts. These subsidiary trusts have no assets, operations, revenues or cash flows other than those related to the issuance, administration, and repayment of the subsidiary trusts and the subsidiary trusts' common securities. These subsidiary trusts' obligations are fully and unconditionally guaranteed by Citigroup.

96

        The following table summarizes the financial structure of each of the Company's subsidiary trusts at March 31, 2007:

								Junior Subordinated Debentures Owned by Trust
Trust Securities with Distributions Guaranteed by Citigroup:							Common Shares Issued to Parent
	Issuance Date	Securities Issued	Liquidation Value		Coupon Rate			Amount(1)		Maturity	Redeemable by Issuer Beginning
In millions of dollars, except share amounts
Citigroup Capital III	Dec. 1996	200,000	$	200	7.625	%	6,186	$	206	Dec. 1, 2036	Not redeemable
Citigroup Capital VII	July 2001	46,000,000		1,150	7.125	%	1,422,681		1,186	July 31, 2031	July 31, 2006
Citigroup Capital VIII	Sept. 2001	56,000,000		1,400	6.950	%	1,731,959		1,443	Sept. 15, 2031	Sept. 17, 2006
Citigroup Capital IX	Feb. 2003	44,000,000		1,100	6.000	%	1,360,825		1,134	Feb. 14, 2033	Feb. 13, 2008
Citigroup Capital X	Sept. 2003	20,000,000		500	6.100	%	618,557		515	Sept. 30, 2033	Sept. 30, 2008
Citigroup Capital XI	Sept. 2004	24,000,000		600	6.000	%	742,269		619	Sept. 27, 2034	Sept. 27, 2009
Citigroup Capital XIV	June 2006	22,600,000		565	6.875	%	40,000		566	June 30, 2066	June 30, 2011
Citigroup Capital XV	Sept. 2006	47,400,000		1,185	6.500	%	40,000		1,186	Sept. 15, 2066	Sept. 15, 2011
Citigroup Capital XVI	Nov. 2006	64,000,000		1,600	6.450	%	20,000		1,601	Dec. 31, 2066	Dec. 31, 2011
Citigroup Capital XVII	Mar. 2007	44,000,000		1,100	6.350	%	20,000		1,101	Mar. 15, 2067	Mar. 15, 2012
Adam Capital Trust II(2)	Apr. 2002	22,000		22	6 mo. LIB +370 bp.		681		23	Apr. 22, 2032	Apr. 22, 2007
Adam Capital Trust III(2)	Dec. 2002	17,500		18	3 mo. LIB +335 bp.		542		18	Jan. 07, 2033	Jan. 07, 2008
Adam Statutory Trust III(2)	Dec. 2002	25,000		25	3 mo. LIB +325 bp.		774		26	Dec. 26, 2032	Dec. 26, 2007
Adam Statutory Trust IV(2)	Sept. 2003	40,000		40	3 mo. LIB +295 bp.		1,238		41	Sept. 17, 2033	Sept. 17, 2008
Adam Statutory Trust V(2)	Mar. 2004	35,000		35	3 mo. LIB +279 bp.		1,083		36	Mar. 17, 2034	Mar. 17, 2009
Total obligated			$	9,540				$	9,701

(1)

Represents the proceeds received from the Trust at the date of issuance.

(2)

Assumed by Citigroup upon completion of First American Bank acquisition.

        In each case, the coupon rate on the debentures is the same as that on the trust securities. Distributions on the trust securities and interest on the debentures are payable quarterly, except for Citigroup Capital III and Adam Capital Trust II, on which distributions are payable semiannually.

        On March 18, 2007 and March 26, 2007, Citigroup redeemed for cash all of the $23 million and $25 million Trust Preferred Securities of Adam Statutory Trust I and Adam Statutory Trust II, respectively, at the redemption price of $1,000 per preferred security plus any accrued distribution up to but excluding the date of redemption.

        On March 6, 2007, Citigroup issued $1.000 billion of Enhanced Trust Preferred Securities (Citigroup Capital XVII). An additional $100 million was issued, related to this Trust, on March 14, 2007.

        On February 15, 2007, Citigroup redeemed for cash all of the $300 million Trust Preferred Securities of Citicorp Capital I, $450 million of Citicorp Capital II, and $400 million of Citigroup Capital II, at the redemption price of $1,000 per preferred security plus any accrued distribution up to but excluding the date of redemption.

        On April 23, 2007, Citigroup redeemed for cash all of the $22 million Trust Preferred Securities of Adam Capital Trust II at the redemption price of $1,000 per preferred security plus any accrued distribution up to but excluding the date of redemption.

97

13.   Securitizations and Variable Interest Entities

        The Company primarily securitizes credit card receivables and mortgages. Other types of assets securitized include corporate debt securities, auto loans, and student loans.

        After securitization of credit card receivables, the Company continues to maintain credit card customer account relationships and provides servicing for receivables transferred to the trusts. The Company also arranges for third parties to provide credit enhancement to the trusts, including cash collateral accounts, subordinated securities, and letters of credit. As specified in some of the sale agreements, the net revenue collected each month is accumulated up to a predetermined maximum amount, and is available over the remaining term of that transaction to make payments of yield, fees, and transaction costs in the event that net cash flows from the receivables are not sufficient. Once the predetermined amount is reached, net revenue is recognized by the Citigroup subsidiary that sold the receivables.

        The Company provides a wide range of mortgage and other loan products to a diverse customer base. In connection with the securitization of these loans, the servicing rights entitle the Company to a future stream of cash flows based on the outstanding principal balances of the loans and the contractual servicing fee. Failure to service the loans in accordance with contractual requirements may lead to a termination of the servicing rights and the loss of future servicing fees. In non-recourse servicing, the principal credit risk to the Company is the cost of temporary advances of funds. In recourse servicing, the servicer agrees to share credit risk with the owner of the mortgage loans such as FNMA or FHLMC or with a private investor, insurer, or guarantor. Losses on recourse servicing occur primarily when foreclosure sale proceeds of the property underlying a defaulted mortgage are less than the outstanding principal balance and accrued interest of the loan and the cost of holding and disposing of the underlying property. The Company's mortgage loan securitizations are primarily non-recourse, thereby effectively transferring the risk of future credit losses to the purchaser of the securities issued by the trust.

        The Company also originates and sells first mortgage loans in the ordinary course of its mortgage banking activities. The Company sells some of these loans to the Government National Mortgage Association (GNMA) with the servicing rights retained. GNMA has the primary recourse obligation on the individual loans; however, GNMA's recourse obligation is capped at a fixed amount per loan. Any losses above that fixed amount are borne by Citigroup as the seller/servicer.

        The following table summarizes certain cash flows received from and paid to securitization trusts during the three months ended March 31, 2007 and 2006:

	Three Months Ended March 31, 2007
In billions of dollars	Credit Cards		U.S. Consumer Mortgages		Markets & Banking Mortgages		Markets & Banking Other		Other(1)
Proceeds from new securitizations	$	6.3	$	26.9	$	16.5	$	13.1	$	—
Proceeds from collections reinvested in new receivables		51.9		—		—		—		0.5
Contractual servicing fees received		0.5		0.3		—		—		—
Cash flows received on retained interests and other net cash flows		2.1		—		—		—		—

(1)

Other includes student loans and other assets.

	Three Months Ended March 31, 2006
In billions of dollars	Credit Cards		U.S. Consumer Mortgages		Markets & Banking Mortgages		Markets & Banking Other		Other(1)
Proceeds from new securitizations	$	6.8	$	12.1	$	5.1	$	7.6	$	0.1
Proceeds from collections reinvested in new receivables		53.9		—		—		—		0.1
Contractual servicing fees received		0.5		0.2		—		—		—
Cash flows received on retained interests and other net cash flows		2.4		—		—		—		—

(1)

Other includes student loans and other assets.

        The Company recognized gains on securitizations of U.S. Consumer mortgages of $31 million and $30 million for the three-month periods ended March 31, 2007 and 2006, respectively. In the first quarter of 2007 and 2006, the Company recorded gains of $248 million and $171 million related to the securitization of credit card receivables. Gains recognized on the securitization of Markets & Banking and other assets during the first three months of 2007 and 2006 were $13 million and $21 million, respectively.

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        Key assumptions used for securitizations of credit cards, mortgages, and other asset securitizations during the three months ended March 31, 2007 and 2006 in measuring the fair value of retained interests at the date of sale or securitization follow:

	Three Months Ended March 31, 2007
	Credit Cards	U.S. Consumer Mortgages	Markets & Banking Mortgages	Markets & Banking Other	Other(1)
Discount rate	12.8% to 16.2%	10.4% to 17.2%	4.1% to 27.9%	5.6% to 27.9%	N/A
Constant prepayment rate	6.5% to 21.2%	7.9% to 21.4%	15.0% to 52.5%	10.0% to 26.0%	N/A
Anticipated net credit losses	3.7% to 6.1%	0.0%	24.0% to 100.0%	N/A	N/A

(1)

Other includes student loans and other assets.

	Three Months Ended March 31, 2006
	Credit Cards	U.S. Consumer Mortgages	Markets & Banking Mortgages	Markets & Banking Other	Other(1)
Discount rate	12.0% to 15.0%	8.6% to 9.6%	5.0% to 26.0%	0.4% to 21.0%	N/A
Constant prepayment rate	8.5% to 20.1%	7.8% to 10.4%	9.0% to 43.0%	14.0% to 33.0%	N/A
Anticipated net credit losses	4.2% to 6.0%	0.0%	0.0% to 40.0%	N/A	N/A

(1)

Other includes student loans and other assets.

        As required by SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" (SFAS 140), the effect of two negative changes in each of the key assumptions used to determine the fair value of retained interests must be disclosed. The negative effect of each change must be calculated independently, holding all other assumptions constant. Because the key assumptions may not in fact be independent, the net effect of simultaneous adverse changes in the key assumptions may be less than the sum of the individual effects shown below.

        At March 31, 2007, the key assumptions used to value retained interests and the sensitivity of the fair value to adverse changes of 10% and 20% in each of the key assumptions were as follows:

Key assumptions at March 31, 2007

	March 31, 2007
	Credit Cards	U.S. Consumer Mortgages(1)	Markets & Banking Mortgages	Markets & Banking Other	Other(2)
Discount rate	12.8% to 16.2%	11.0%	4.1% to 27.9%	5.6% to 27.9%	6.0% to 10.7%
Constant prepayment rate	6.7% to 21.0%	11.7%	15.0% to 52.5%	10.0% to 26.0%	5.6% to 20.1%
Anticipated net credit losses	3.7% to 5.9%	0.0%	24.0% to 100.0%	N/A	1.1%
Weighted average life years	11 to 12 Months	6.1 years	6.5 to 21.2	6.5 to 9.8	7 years

(1)

Includes mortgage servicing rights.

(2)

Other includes student loans and other assets.

		March 31, 2007
In millions of dollars		Credit Cards			U.S. Consumer Mortgages			Markets & Banking Mortgages			Markets & Banking Other			Other(1)
Carrying value of retained interests		$	7,246		$	9,842		$	3,559		$	7,587		$	1,372
Discount Rates
	10%	$	(66	)	$	(260	)	$	(28	)	$	(19	)	$	(24	)
	20%		(130	)		(505	)		(54	)		(37	)		(47	)
Constant prepayment rate
	10%	$	(235	)	$	(474	)	$	(10	)	$	(1	)	$	(15	)
	20%		(443	)		(903	)		(25	)		(1	)		(28	)
Anticipated net credit losses
	10%	$	(396	)	$	(8	)	$	(36	)		N/A		$	(5	)
	20%		(789	)		(15	)		(67	)		N/A			(10	)

(1)

Other includes student loans and other assets.

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Managed Loans

        After securitization of credit card receivables, the Company continues to maintain credit card customer account relationships and provides servicing for receivables transferred to the trusts. As a result, the Company considers the securitized credit card receivables to be part of the business it manages.

        The following tables present a reconciliation between the managed basis and on-balance sheet credit card portfolios and the related delinquencies (loans which are 90 days or more past due) at March 31, 2007 and December 31, 2006, and credit losses, net of recoveries for the three-month periods ended March 31, 2007 and 2006.

In millions of dollars, except loans in billions	Mar. 31, 2007		Dec. 31, 2006
Principal amounts, at period end
On-balance sheet loans	$	68.1	$	75.5
Securitized amounts		98.6		99.5
Loans held-for-sale		3.0		—
Total managed	$	169.7	$	175.0
Delinquencies, at period end
On balance sheet loans	$	1,323	$	1,427
Securitized amounts		1,528		1,616
Loans held-for-sale		47		—
Total managed	$	2,898	$	3,043

		Three Months Ended March 31,
Credit losses, net of recoveries		2007		2006
	On-balance sheet loans	$	823	$	664
	Securitized amounts		1,150		871
	Loans held-for-sale		—		4
	Total managed	$	1,973	$	1,539

Mortgage Servicing Rights

        The fair value of capitalized mortgage loan servicing rights (MSRs) was $8.8 billion, $5.4 billion and $5.0 billion at March 31, 2007, December 31, 2006 and March 31, 2006, respectively.

        The following table summarizes the changes in capitalized MSRs:

	Three Months Ended March 31,
In millions of dollars	2007			2006
Balance, beginning of period	$	5,439		$	4,339
Originations		427			176
Purchases		3,119			162
Changes in fair value of MSRs due to changes in inputs and assumptions		125			515
Other changes(1)		(278	)		(237	)
Balance, end of period	$	8,832		$	4,955

(1)

Represents changes due to customer payments and passage of time.

        The market for MSRs is not sufficiently liquid to provide participants with quoted market prices. Therefore, the Company uses an option-adjusted spread valuation approach to determine the fair value of MSRs. This approach consists of projecting servicing cash flows under multiple interest rate scenarios, and discounting these cash flows using risk-adjusted discount rates. The key assumptions used in the valuation of MSRs include mortgage prepayment speeds and discount rates. The model assumptions and the MSRs' fair value estimates are compared to observable trades of similar MSR portfolios and interest-only security portfolios, as well as to MSR broker valuations and industry surveys. The cash flow model and underlying prepayment and interest rate models used to value these MSRs are subject to validation in accordance with the Company's model validation policies. Refer to key assumptions at March 31, 2007 on page 99 for the key assumptions used in the MSR valuation process.

        The fair value of the MSRs is primarily affected by changes in prepayments that result from shifts in mortgage interest rates. In managing this risk, the Company hedges a significant portion of the value of its MSRs through the use of interest rate derivative contracts, forward purchase commitments of mortgage-backed securities, and purchased securities classified as trading. The amount of contractually specified servicing fees, late fees and ancillary fees earned were $287 million, $16 million and $12 million, respectively, for the first quarter of 2007; and $242 million, $14 million and $10 million, respectively, for the first quarter of 2006. These fees are classified in the Consolidated Statement of Income as Commissions and Fees.

Variable Interest Entities

        The following table represents the carrying amounts and classification of consolidated assets that are collateral for VIE obligations, including VIEs that were consolidated prior to the implementation of FIN 46-R under existing guidance and VIEs that the Company became involved with after July 1, 2003:

In billions of dollars	March 31, 2007		December 31, 2006
Cash	$	0.6	$	0.5
Trading account assets		33.8		31.6
Investments		11.7		10.1
Loans		6.9		6.8
Other assets		5.8		5.7
Total assets of consolidated VIEs	$	58.8	$	54.7

        The consolidated VIEs included in the table above represent hundreds of separate entities with which the Company is involved and include VIEs consolidated as a result of adopting FIN 46-R and FIN 46. Of the $58.8 billion and $54.7 billion of total assets of VIEs consolidated by the Company at March 31, 2007 and December 31, 2006, respectively, $23.2 billion and $39.2 billion represent structured transactions where the Company packages and securitizes assets purchased in the financial markets or from clients in order to create new security offerings and financing opportunities for clients; $33.4 billion and $13.1 billion represent investment vehicles that were established to provide a return to the investors in the vehicles; and $2.2 billion and $2.4 billion represent vehicles that hold lease receivables and equipment as collateral to issue debt securities, thus obtaining secured financing at favorable interest rates.

        The Company may provide various products and services to the VIEs. It may provide liquidity facilities, may be a party to derivative contracts with VIEs, may provide loss enhancement in the form of letters of credit and other guarantees to the VIEs, may be the investment manager, and

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may also have an ownership interest or other investment in certain VIEs. In general, the investors in the obligations of consolidated VIEs have recourse only to the assets of the VIEs and do not have recourse to the Company, except where the Company has provided a guarantee to the investors or is the counterparty to a derivative transaction involving the VIE.

        In addition to the VIEs that are consolidated in accordance with FIN 46-R, the Company has significant variable interests in certain other VIEs that are not consolidated because the Company is not the primary beneficiary. These include multi-seller finance companies, collateralized debt obligations (CDOs), structured finance transactions, and numerous investment funds. In addition to these VIEs, the Company issues preferred securities to third- party investors through trust vehicles as a source of funding and regulatory capital, which were deconsolidated during the 2004 first quarter. The Company's liabilities to the deconsolidated trust are included in long-term debt.

        The Company administers several third-party-owned, special purpose, multi-seller finance companies that purchase pools of trade receivables, credit cards, and other financial assets from third-party clients of the Company. As administrator, the Company provides accounting, funding, and operations services to these conduits. Generally, the Company has no ownership interest in the conduits. The sellers continue to service the transferred assets. The conduits' asset purchases are funded by issuing commercial paper and medium-term notes. The sellers absorb the first losses of the conduits by providing collateral in the form of excess assets. The Company, along with other financial institutions, provides liquidity facilities, such as commercial paper backstop lines of credit to the conduits. The Company also provides loss enhancement in the form of letters of credit and other guarantees. All fees are charged on a market basis.

        During 2003, to comply with FIN 46-R, many of the conduits issued "first loss" subordinated notes such that one third-party investor in each conduit would be deemed the primary beneficiary and would consolidate the conduit. At March 31, 2007 and December 31, 2006, total assets in unconsolidated conduits were $74.3 billion and $66.3 billion, respectively.

        The Company also packages and securitizes assets purchased in the financial markets in order to create new security offerings, including arbitrage CDOs and synthetic CDOs for institutional clients and retail customers, that match the clients' investment needs and preferences. Typically, these instruments diversify investors' risk to a pool of assets as compared with investments in an individual asset. The VIEs, which are issuers of CDO securities, are generally organized as limited liability corporations. The Company typically receives fees for structuring and/or distributing the securities sold to investors. In some cases, the Company may repackage the investment with higher rated debt CDO securities or U.S. Treasury securities to provide a greater or a very high degree of certainty of the return of invested principal. A third-party manager is typically retained by the VIE to select collateral for inclusion in the pool and then actively manage it, or, in other cases, only to manage work-out credits. The Company may also provide other financial services and/or products to the VIEs for market-rate fees. These may include: the provision of liquidity or contingent liquidity facilities; interest rate or foreign exchange hedges and credit derivative instruments; and the purchasing and warehousing of securities until they are sold to the SPE. The Company is not the primary beneficiary of these VIEs under FIN 46-R due to its limited continuing involvement and, as a result, does not consolidate their assets and liabilities in its financial statements.

        In addition to the conduits discussed above, the following table represents the assets of unconsolidated VIEs where the Company has significant involvement:

In billions of dollars	March 31, 2007		December 31, 2006
CDO-type transactions	$	67.2	$	52.1
Investment-related transactions		135.1		122.1
Trust preferred securities		9.6		9.8
Mortgage-related transactions		1.9		2.7
Structured finance and other		35.6		41.1
Total assets of significant unconsolidated VIEs	$	249.4	$	227.8

        The Company has also established a number of investment funds as opportunities for qualified employees to invest in venture capital investments. The Company acts as investment manager to these funds and may provide employees with financing on both a recourse and non-recourse basis for a portion of the employees' investment commitments.

        In addition, the Company administers numerous personal estate trusts. The Company may act as trustee and may also be the investment manager for the trust assets.

        As mentioned above, the Company may, along with other financial institutions, provide liquidity facilities, such as commercial paper backstop lines of credit to the VIEs. The Company may be a party to derivative contracts with VIEs, may provide loss enhancement in the form of letters of credit and other guarantees to the VIEs, may be the investment manager, and may also have an ownership interest in certain VIEs. Although actual losses are not expected to be material, the Company's maximum exposure to loss as a result of its involvement with VIEs that are not consolidated was $108 billion and $109 billion at March 31, 2007 and December 31, 2006, respectively. For this purpose, maximum exposure is considered to be the notional amounts of credit lines, guarantees, other credit support, and liquidity facilities, the notional amounts of credit default swaps and certain total return swaps, and the amount invested where Citigroup has an ownership interest in the VIEs. In addition, the Company may be party to other derivative contracts with VIEs. Exposures that are considered to be guarantees are also included in Note 17 on page 111.

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14.   Changes in Accumulated Other Comprehensive Income (Loss) ("AOCI")

        Changes in each component of AOCI for the three-month period ended March 31, 2007 were as follows:

In millions of dollars	Net Unrealized Gains on Investment Securities			Foreign Currency Translation Adjustment			Cash Flow Hedges			Pension Liability Adjustment			Accumulated Other Comprehensive Income (Loss)
Balance, December 31, 2006(1)	$	943		$	(2,796	)	$	(61	)	$	(1,786	)	$	(3,700	)
Adjustment to opening balance, net of tax(2)		149			—			—			—			149
Adjusted balance, beginning of year	$	1,092		$	(2,796	)	$	(61	)	$	(1,786	)	$	(3,551	)
Increase in net unrealized gains on investment securities, net of tax		466			—			—			—			466
Less: Reclassification adjustment for gains included in net income, net of tax		(307	)		—			—			—			(307	)
Foreign currency translation adjustment, net of tax		—			(121	)		—			—			(121	)
Cash flow hedges, net of tax(3)		—			—			(439	)		—			(439	)
Pension liability adjustment, net of tax		—			—			—			77			77
Current period change	$	159		$	(121	)	$	(439	)	$	77		$	(324	)
Balance, March 31, 2007	$	1,251		$	(2,917	)	$	(500	)	$	(1,709	)	$	(3,875	)

(1)

The 2006 AOCI balance has been adjusted by a $1.647 billion reduction related to the 2006 adoption of SFAS 158. In Citigroup's 2006 Form 10-K, the impact of this adjustment was presented as 2006 activity and therefore was included in Comprehensive Income when it should have been disclosed as an adjustment in the reporting period and excluded from Comprehensive Income. The December 31, 2006 AOCI balance reported in the 2006 Form 10-K was properly stated.

(2)

The after-tax adjustment to the opening balance of Accumulated other comprehensive income (loss) represents the reclassification of the unrealized gains (losses) related to the Legg Mason securities, as well as several miscellaneous items previously reported in accordance with SFAS 115. The related unrealized gains and losses were reclassified to retained earnings upon the adoption of the fair value option in accordance with SFAS 159. See Note 1 and Note 16 on page 85 and 105, respectively, for further discussions.

(3)

Reflects, among other items, the decline in market interest rates during the quarter on pay-fixed swap programs hedging floating rate deposits and long-term debt.

15.   Derivatives Activities

        In the ordinary course of business, Citigroup enters into various types of derivative transactions. These derivative transactions include:

•

Futures and forward contracts which are commitments to buy or sell at a future date a financial instrument, commodity or currency at a contracted price and may be settled in cash or through delivery.



•

Swap contracts which are commitments to settle in cash at a future date or dates that may range from a few days to a number of years, based on differentials between specified financial indices, as applied to a notional principal amount.



•

Option contracts which give the purchaser, for a fee, the right, but not the obligation, to buy or sell within a limited time a financial instrument or currency at a contracted price that may also be settled in cash, based on differentials between specified indices.

        Citigroup enters into these derivative contracts for the following reasons:

•

Trading Purposes—Customer Needs—Citigroup offers its customers derivatives in connection with their risk-management actions to transfer, modify or reduce their interest rate, foreign exchange and other market/credit risks or for their own trading purposes. As part of this process, Citigroup considers the customers' suitability for the risk involved, and the business purpose for the transaction. Citigroup also manages its derivative-risk positions through offsetting trade activities, controls focused on price verification, and daily reporting of positions to senior managers.



•

Trading Purposes—Own Account—Citigroup trades derivatives for its own account. Trading limits and price verification controls are key aspects of this activity.



•

Asset/Liability Management Hedging—Citigroup uses derivatives in connection with its risk-management activities to hedge certain risks. For example, Citigroup may issue a fixed rate long-term note and then enter into a receive-fixed, pay-variable-rate interest rate swap with the same tenor and notional amount to convert the interest

        payments to a net variable-rate basis. This strategy is the most common form of an interest rate hedge, as it minimizes interest cost in certain yield curve environments. Derivatives are also used to manage risks inherent in specific groups of on-balance sheet assets and liabilities, including investments, corporate and consumer loans, deposit liabilities, other interest-sensitive assets and liabilities, as well as credit card securitizations, redemptions and sales. In addition, foreign exchange contracts are used to hedge non-U.S. dollar denominated debt, available-for-sale securities, net capital exposures and foreign exchange transactions.

        Citigroup accounts for its hedging activity in accordance with SFAS 133. As a general rule, SFAS 133 hedge accounting is permitted for those situations where the Company is exposed to a particular risk, such as interest rate or foreign exchange risk, that causes changes in the fair value of an asset or liability, or variability in the expected future cash flows of an existing asset, liability, or a forecasted transaction.

        Derivative contracts hedging the risks associated with the changes in fair value are referred to asfair value hedges, while

102

contracts hedging the risks affecting the expected future cash flows are calledcash flow hedges. Hedges that utilize derivatives to manage the foreign exchange risk associated with equity investments in non-U.S. dollar functional currency foreign subsidiaries are callednet investment hedges.

        All derivatives are reported on the balance sheet at fair value. If certain hedging criteria specified in SFAS 133 are met, including testing for hedging effectiveness, special hedge accounting may be applied. The hedge effectiveness assessment methodologies for similar hedges are performed in a similar manner and are used consistently throughout the hedging relationships. For fair value hedges, the changes in value of the hedging derivative, as well as the changes in value of the related hedged item, due to the risk being hedged, are reflected in current earnings. For cash flow hedges and net investment hedges, the changes in value of the hedging derivative are reflected in Accumulated other comprehensive income (loss) in stockholders' equity, to the extent the hedge was effective. Hedge ineffectiveness, in either case, is reflected in current earnings.

        Continuing with the example referred to above, the fixed rate long-term note is recorded at amortized cost under current U.S. GAAP. However, by electing to use SFAS 133 hedge accounting, the carrying value of this note is adjusted for changes in the benchmark floating rate, with any changes in fair value recorded in current earnings. The related interest rate swap is also recorded on the balance sheet at fair value, with any changes in fair value attributable to changes in interest rates reflected in earnings. Thus, any ineffectiveness resulting from the hedging relationship is recorded in current earnings. Alternatively, an economic-basis hedge, which does not meet the SFAS 133 hedging criteria, would involve only recording the derivative at fair value on the balance sheet, with its associated changes in value recorded in earnings. The note would continue to be carried at amortized cost, and therefore, current earnings would be impacted only by the interest rate shifts that cause the change in the swap's value. This type of hedge is undertaken when SFAS 133 hedge requirements cannot be achieved in an efficient and cost-effective manner.

Fair value hedges

•

Hedging of benchmark interest rate risk—Citigroup hedges exposure to changes in the fair value of fixed-rate financing transactions, including liabilities related to outstanding debt, borrowings and time deposits. The fixed cash flows from those financing transactions are converted to benchmark-variable-rate cash flows by entering into receive-fixed, pay-variable interest rate swaps. Typically these fair value hedge relationships use dollar-offset ratio analysis to assess whether the hedging relationships are highly effective at inception and on an ongoing basis.

        Citigroup also hedges exposure to changes in the fair value of fixed-rate assets, including available-for-sale securities, reverse repurchase agreements and inter-bank placements. The hedging instruments mainly used are receive-variable, pay-fixed interest rate swaps for the remaining hedged asset categories. Most of these fair value hedging relationships use dollar-offset ratio analysis to assess whether the hedging relationships are highly effective at inception and on an ongoing basis, while others use regression analysis.

        For a limited number of fair value hedges of benchmark interest rate risk, Citigroup uses the "shortcut" method as SFAS 133 allows the Company to assume no ineffectiveness if the hedging relationship involves an interest-bearing financial asset or liability and an interest rate swap. In order to assume no ineffectiveness, Citigroup ensures that all the shortcut method requirements of SFAS 133 for these types of hedging relationships are met.

•

Hedging of foreign exchange risk—Citigroup hedges the change in fair value attributable to foreign exchange rate movements in available-for-sale securities that are denominated in currencies other than the functional currency of the entity holding the securities, which may be within or outside the U.S. Typically, the hedging instrument employed is a short-term forward foreign exchange contract. In this type of hedge, the change in fair value of the hedged available-for-sale security attributable to the portion of foreign exchange risk hedged is reported in earnings and not other comprehensive income—a process that serves to offset substantially the change in fair value of the forward contract that is also reflected in earnings. Citigroup typically considers the premium associated with forward contracts (differential between spot and contractual forward rates) as the cost of hedging; this is generally excluded from the assessment of hedge effectiveness and reflected directly in earnings. Hedge effectiveness is typically assessed based on changes in fair value attributable to changes in spot rates on both the available-for-sale securities and the forward contracts for the portion of the relationship hedged. As a result, the amount of hedge ineffectiveness is not significant.



•

Hedging the overall changes in fair value—Citigroup primarily hedges the change in the overall fair value of portfolios of similar held-for-sale mortgage loans. Derivatives used in these hedging relationships are mainly forward sales of mortgage-backed securities. Citigroup assesses effectiveness at inception and on an ongoing basis using regression analysis.

Cash flow hedges

•

Hedging of benchmark interest rate risk—Citigroup hedges variable cash flows resulting from floating-rate financings, including debt, deposits with stated maturities. Variable cash flows from those financings are converted to fixed-rate cash flows by entering into receive-variable, pay-fixed interest rate swaps. Efforts are made to match all critical terms of the hedged item and the hedging derivative at inception and on an ongoing basis to eliminate hedge ineffectiveness. To the extent all critical terms are not matched, these cash flow hedging relationships use regression or dollar-offset ratio analysis to assess whether the hedging relationships are highly effective at inception and on an ongoing basis. Since efforts are made initially to align the terms of the derivatives to those hedged forecasted cash flows, the amount of hedge ineffectiveness is not significant.

        Citigroup also hedges variable cash flows resulting from investments in floating-rate available-for-sale securities, loans and receivables, as well as rollovers of short-term certificates of deposit. Variable cash flows from those assets are converted to fixed-rate cash flows by entering into receive-fixed, pay-variable interest rate swaps. These cash flow hedging relationships use regression or dollar-offset ratio analysis to assess whether the hedging relationships are highly effective at inception and on an

103

ongoing basis. Efforts are made initially to align the terms of the derivatives to those hedged forecasted cash flows. As a result, the amount of hedge ineffectiveness is not significant.

•

Hedging of foreign exchange risk—Citigroup locks in the functional currency equivalent of cash flows of various balance sheet exposures, including deposits, notes and long-term debt (and the forecasted issuances, purchases or rollover of such items) that are denominated in a currency other than the functional currency of the issuing entity. Depending on the risk management objectives, these types of hedges are designated as either cash flow hedges of only foreign exchange risk or cash flow hedges of both foreign exchange and interest rate risk. Generally, the hedging instruments used are foreign exchange forward contracts and cross-currency swaps. Citigroup matches all critical terms of the hedged item and the hedging derivative at inception and on an ongoing basis to eliminate hedge ineffectiveness. To the extent all critical terms are not matched, any ineffectiveness is measured using the "hypothetical derivative method" as described in FASB Derivative Implementation Group Issue G7. Efforts are made initially to match up the terms of the hypothetical and actual derivatives used. As a result, the amount of hedge ineffectiveness is not significant.



•

Hedging the overall changes in cash flows—In situations where the contractual rate of a variable rate asset or liability is not a benchmark rate, Citigroup designates the risk of overall changes in cash flows as the hedged risk. Citigroup primarily hedges variability in the total cash flows related to non-benchmark-rate-based liabilities, such as customer deposits with stated maturities, and uses receive-variable, pay-fixed interest rate swaps as the hedging instrument. These cash flow hedging relationships use regression or dollar-offset ratio analysis to assess effectiveness at inception and on an ongoing basis.

        Citigroup also hedges the forecasted purchase of mortgage-backed securities and designates the overall change in the purchase price as a hedged risk. The assessment of effectiveness is based on ensuring that the critical terms of the hedging instrument and the hedged item match exactly.

Net investment hedges

        Consistent with SFAS No. 52, "Foreign Currency Translation" (SFAS 52), SFAS 133 allows hedging of the foreign currency risk of a net investment in a foreign operation. Citigroup primarily uses foreign currency forward contracts, short-term borrowings, and to a lesser extent foreign currency future contracts and foreign-currency-denominated debt instruments, to manage the foreign exchange risk associated with Citigroup's equity investments in several non-U.S. dollar functional currency foreign subsidiaries. In accordance with SFAS 52, Citigroup records the change in the carrying amount of these investments in the cumulative translation adjustment account within Accumulated other comprehensive income (loss). Simultaneously, the effective portion of the hedge of this exposure is also recorded in the cumulative translation adjustment account, and any ineffective portion of net investment hedges is immediately recorded in earnings.

        Achieving hedge accounting in compliance with SFAS 133 guidelines is extremely complex. Key aspects of achieving SFAS 133 hedge accounting are documentation of hedging strategy and hedge effectiveness at the hedge inception and substantiating hedge effectiveness on an ongoing basis. A derivative must be highly effective in accomplishing the hedge objective of offsetting either changes in the fair value or cash flows of the hedged item for the risk being hedged. Any ineffectiveness in the hedge relationship is recognized in current earnings. The assessment of effectiveness excludes changes in the value of the hedged item that are unrelated to the risks being hedged. Similarly, the assessment of effectiveness may exclude changes in the fair value of a derivative related to time value that, if excluded, are recognized in current earnings.

        The following table summarizes certain information related to the Company's hedging activities for the three months ended March 31, 2007 and 2006:

		Three Months Ended March 31,
In millions of dollars		2007			2006
Fair value hedges
	Hedge ineffectiveness recognized in earnings	$	17		$	66
	Net gain excluded from assessment of effectiveness		82			19
Cash flow hedges
	Hedge ineffectiveness recognized in earnings		—			(10	)
	Net gain excluded from assessment of effectiveness		—			—
Net investment hedges
	Net loss included in foreign currency translation adjustment within Accumulated other comprehensive income (loss)	$	(23	)	$	(114	)

        The change in Accumulated other comprehensive income (loss) from cash flow hedges for the three months ended March 31, 2007 and 2006 can be summarized as follows (after-tax):

In millions of dollars	2007			2006
Balance at January 1,	$	(61	)	$	612
Net gain (loss) from cash flow hedges		(347	)		317
Net amounts reclassified to earnings		(92	)		(111	)
Balance at March 31,	$	(500	)	$	818

        Derivatives may expose Citigroup to market, credit or liquidity risks in excess of the amounts recorded on the Consolidated Balance Sheet. Market risk on a derivative product is the exposure created by potential fluctuations in interest rates, foreign exchange rates and other values, and is a function of the type of product, the volume of transactions, the tenor and terms of the agreement, and the underlying volatility. Credit risk is the exposure to loss in the event of nonperformance by the other party to the transaction where the value of any collateral held is not adequate to cover such losses. The recognition in earnings of unrealized gains on these transactions is subject to management's assessment as to collectibility. Liquidity risk is the potential exposure that arises when the size of the derivative position may not be able to be rapidly adjusted in periods of high volatility and financial stress at a reasonable cost.

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16.   Fair Value

        Effective January 1, 2007, the Company adopted SFAS 157 and SFAS 159. Both standards address aspects of the expanding application of fair value accounting.

Fair Value Measurements (SFAS 157)

        SFAS 157 defines fair value, establishes a consistent framework for measuring fair value and expands disclosure requirements about fair value measurements. SFAS 157, among other things, requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. In addition, SFAS 157 precludes the use of block discounts when measuring the fair value of instruments traded in an active market, which were previously applied to large holdings of publicly traded equity securities. It also requires recognition of trade-date gains related to certain derivative transactions whose fair value has been determined using unobservable market inputs. This guidance supersedes the guidance in Emerging Issues Task Force Issue No. 02-3, "Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management Activities" (EITF Issue 02-3), which prohibited the recognition of trade-date gains for such derivative transactions when determining the fair value of instruments not traded in an active market. The cumulative effect of these two changes resulted in an increase to January 1, 2007 retained earnings of $75 million after-tax.

        In moving to maximize the use of observable inputs as required by SFAS 157, the Company has made some amendments to the techniques used in measuring the fair value of derivative positions. These amendments change the way that the probability of default of a counterparty is factored into the valuation of derivative positions, include for the first time the impact of Citigroup's own credit standing, and also eliminate the portfolio servicing adjustment that is no longer necessary under SFAS 157. The cumulative effect of these amendments to derivative valuation techniques was a gain of $250 million after-tax $(402 million pretax) included in 2007 first quarter earnings, all of which was recorded in the Markets & Banking business.

        The Company holds fixed income and equity securities, derivatives, investments in private equity, a limited number of loan portfolios and certain other financial instruments, which are carried at fair value. The Company determines fair value based upon quoted prices when available or through the use of alternative approaches, such as matrix or model pricing, when market quotes are not readily accessible or available. More specifically, for fixed income securities and derivatives, the Company's alternative approach when market prices are not available is to discount the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. There is no allowance for loan losses relating to loans carried at fair value.

        The Company carries a number of its liabilities at fair value including certain structured notes and derivative liabilities. In determining the fair value of the Company's obligations, various factors are considered including: closing

        exchange or over-the-counter market price quotations; time value and volatility factors underlying options, warrants, and

        derivatives; price activity for equivalent or synthetic instruments; the potential impact on market prices or fair value of liquidating the Company's positions in an orderly manner over a reasonable period of time under current market conditions, and Citigroup's own-credit standing.

        These valuation techniques are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's market assumptions. These two types of inputs create the following fair value hierarchy:

•

Level 1—Quoted prices foridentical instruments in active markets



•

Level 2—Quoted prices forsimilar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.



•

Level 3—Instruments whose significant value drivers areunobservable.

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        The following table presents for each of these hierarchy levels, the Company's assets and liabilities that are measured at fair value at March 31, 2007.

In millions of dollars		Level 1		Level 2		Level 3		Netting(1)			Net balance
Assets
Federal funds sold and securities borrowed or purchased under agreements to resell(1)		$	—	$	158,808	$	16	$	(80,711	)	$	78,113
Trading account assets
	Trading securities		174,885		203,369		35,345		—			413,599
	Derivatives		6,796		257,551		6,635		(224,516	)		46,466
Investments			102,832		165,298		12,653		—			280,783
Loans and leases(2)			—		1,832		—		—			1,832
Other financial assets
	Measured on a recurring basis		—		4,456		8,919		—			13,375
	Measured on a non-recurring basis(3)		—		12,612		3,568		—			16,180
Liabilities
Interest-bearing deposits			—		1,947		107		—			2,054
Federal funds purchased and securities loaned or sold under agreements to repurchase(1)			—		255,387		6,278		(80,819	)		180,846
Trading account liabilities
	Securities sold not yet purchased		98,021		1,256		434		—			99,711
	Derivatives		9,955		279,528		5,401		(220,693	)		74,191
Short-term borrowings			—		12,415		1,889		—			14,304
Long-term debt			—		29,888		1,349		—			31,237
Other financial liabilities
	Measured on a recurring basis		—		954		8		—			962

(1)

Represents netting of: (i) the amounts due under securities purchased under agreements to resell and the amounts owed under securities sold under agreements to repurchase in accordance with FASB Interpretation No. 41, "Offsetting of Amounts Related to Certain Repurchase and Reverse Repurchase Agreements", and (ii) derivative exposures covered by a qualifying master netting agreement in accordance with FASB Interpretation No. 39, "Offsetting of Amounts Relating to Certain Contracts."

(2)

There is no allowance for loan losses recorded for loans reported at fair value. Upon the adoption of SFAS 159 on January 1, 2007, the Company excluded those loan portfolios.

(3)

Primarily represents loans held for sale and assets obtained from purchase acquisitions.

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        The following table presents the changes in the Level 3 fair value category for the three months ended March 31, 2007:

				Net realized/unrealized gains(losses) included in
									Transfers in and/or out of Level 3			Purchases, issuances and settlements					Unrealized gains (losses) still held(3)
In millions of dollars		Dec. 31, 2006		Principal transactions			Other(1)(2)								March 31, 2007
Assets
Securities purchased under agreements to resell		$	16	$	—		$	—	$	—		$	—		$	16	$	—
Trading account assets
	Trading securities		21,727		1,866			80		7,651			4,021			35,345		832
	Derivatives (gross)		9,136		4,884			—		(3,385	)		(4,000	)		6,635		4,014
Investments			11,468		—			183		580			422			12,653		27
Other financial assets
	Measured on a recurring basis		5,558		—			269		(418	)		3,510			8,919		265
Liabilities
Interest-bearing deposits			60		—			1		—			46			107		2
Securities sold under agreements to repurchase			6,350		(72	)		—		—			(144	)		6,278		(72	)
Trading account liabilities
	Securities sold not yet purchased		467		(12	)		—		(2,285	)		2,240			434		(15	)
	Derivatives (gross)		7,768		(1,222	)		—		(3,778	)		189			5,401		(687	)
Short-term borrowings			397		8			—		—			1,500			1,889		2
Long-term debt			1,693		—			—		—			(344	)		1,349		—
Other financial liabilities measured on a recurring basis			—		—			—		—			8			8		—

(1)

Changes in fair value for Investments are recorded in Accumulated other comprehensive income, while gains and losses from sales are recorded in Realized gains (losses) from sales of investments on the Consolidated Statement of Income.

(2)

Unrealized gains (losses) on MSRs, included in Other financial assets in this table, are recorded in Commissions and fees on the Consolidated Statement of Income

(3)

Represents the amount of total gains or losses for the period, included in earnings, attributable to the change in unrealized gains (losses) relating to assets and liabilities classified as Level 3 that are still held at March 31, 2007.

Fair Value Option for Financial Assets and Financial Liabilities (SFAS 159)

        On February 15, 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" (SFAS 159 or fair value option accounting). Under SFAS 159, the Company may elect to report most financial instruments and certain other items at fair value on an instrument-by-instrument basis with changes in fair value reported in earnings. After the initial adoption, the election is made at the acquisition of an eligible financial asset, financial liability, or firm commitment or when certain specified reconsideration events occur. The fair value election may not be revoked once an election is made.

        Additionally, the transition provisions of SFAS 159 permit a one-time election for existing positions at the adoption date with a cumulative-effect adjustment included in opening retained earnings and future changes in fair value reported in earnings.

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Impact to retained earnings for certain fair value elections

        Effective January 1, 2007, the Company early adopted SFAS 159 for certain eligible financial instruments. Detailed below are the December 31, 2006 carrying values prior to adoption, the transition adjustments booked to opening retained earnings and the fair values (that is, the carrying values at January 1, 2007 after adoption) for those items that were selected for fair value option accounting and that had an impact on retained earnings:

In millions of dollars	December 31, 2006 (Carrying value prior to adoption)		Cumulative-effect Adjustment to January 1, 2007 Retained earnings-gain (loss)			January 1, 2007 Fair Value (Carrying value after adoption)
Legg Mason convertible preferred equity securities originally classified as available-for-sale(1)	$	797	$	(232	)	$	797
Selected portfolios of securities purchased under agreements to resell		167,525		25			167,550
Selected portfolios of securities sold under agreements to repurchase		237,788		40			237,748
Selected non-collateralized short-term borrowings		3,284		(7	)		3,291
Selected letters of credit hedged by credit default swaps or participation notes		—		14			14
Various miscellaneous eligible items(1)		96		3			96
Pretax cumulative effect of adopting fair value option accounting			$	(157	)
After-tax cumulative effect of adopting fair value option accounting			$	(99	)

(1)

The Legg Mason securities as well as several miscellaneous items were previously reported at fair value within available-for-sale securities. The cumulative-effect adjustment represents the reclassification of the related unrealized gain/loss from Accumulated other comprehensive income to retained earnings upon the adoption of the fair value option.

        Additional information regarding each of these items follows.

Legg Mason convertible preferred equity securities

        The Legg Mason convertible preferred equity securities (Legg shares) were acquired in connection with the sale of Citigroup's Asset Management business in December 2005. We hold these shares as a non-strategic investment for long-term appreciation and, therefore, selected fair value option accounting in anticipation of the January 2008 implementation of the proposed Investment Company Audit Guide Statement of Position, "Clarification of the Scope of Audit and Accounting GuideAudits of Investment Companies and Accounting by Parent Companies and Equity Method Investors for Investment Companies" (SOP).

        Under the current investment company accounting model, investments held in investment company vehicles are recorded at full fair value and are not subject to consolidation guidelines. Under the proposed SOP, non-strategic investments not held in investment companies, which are deemed similar to non-strategic investments held in Citigroup's investment companies, must be accounted for at full fair value in order for Citigroup to retain investment company accounting in the Company's Consolidated Financial Statements. If investment company accounting requirements cannot be met (for example, if we failed to account for similar non-strategic investments at fair value with changes in value recorded in earnings), Citigroup would be required to account for each investment in the investment company under other relevant accounting standards, including consolidation of majority-owned or controlled investees. We believe that Citigroup's consolidation of non-strategic investments would not provide meaningful information and would confuse readers of our financial statements. Therefore, we have utilized the fair value option to migrate the Legg shares from available-for-sale (where changes in fair value are recorded in Accumulated other comprehensive income (loss)) to a full fair value model (where changes in value are recorded in earnings). On a prospective basis, as we acquire non-strategic public or private equity investments, we will consider electing fair value accounting for investments that are similar to those held in our investment companies.

        Prior to the election of fair value option accounting, these shares were classified as available-for-sale securities with the unrealized loss of $232 million as of December 31, 2006 included in Accumulated other comprehensive income (loss). In connection with the Company's adoption of SFAS 159, this unrealized loss was recorded as a reduction of January 1, 2007 retained earnings as part of the cumulative-effect adjustment. We have no intention of selling the Legg shares prior to our previously estimated recovery period. The Legg shares are now included in Trading account assets on Citigroup's Consolidated Balance Sheet. The decrease in market value for the 2007 first quarter of $7 million pretax was reported with Principal transactions in the Company's Consolidated Statement of Income. Dividends are included in Interest revenue.

Selected portfolios of securities purchased under agreements to resell, securities sold under agreements to repurchase, and certain non-collateralized short-term borrowings

        The Company has elected the fair value option for our United States and United Kingdom portfolios of fixed income securities purchased under agreements to resell, and fixed income securities sold under agreements to repurchase (and related non-collateralized short-term borrowings) because these positions are managed on a fair value basis. Specifically, related interest rate risk is managed on a portfolio basis, primarily with derivative instruments that are accounted for at fair value through earnings. Previously, these positions were accounted for on the accrual basis.

        The cumulative effect of $58 million pretax ($37 million after-tax) from adopting the fair value option was recorded as an increase in the January 1, 2007 retained earnings balance. $25 million pretax of that cumulative effect related to

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securities purchased under agreements to resell, while $40 million pretax related to securities sold under agreements to repurchase, offset by a reduction of $7 million pretax for non-collateralized short-term borrowings. The change in fair value for the first quarter of 2007, a $111 million pretax gain, was recorded in Principal transactions on the Company's Consolidated Statement of Income, $137 million gain related to securities purchased under agreement to resell, offset by a $23 million loss for securities sold under an agreement to repurchase, and a $3 million loss for related non-collateralized short-term borrowings.

        The related interest income and interest expense are measured based on the contractual rates specified in the transactions and are reported as interest revenue and expense in the Consolidated Statement of Income.

        The March 31, 2007 gross balance of $159 billion for securities purchased under agreements to resell and $262 billion for securities sold under agreements to repurchase are included in their respective accounts in the Consolidated Balance Sheet. Furthermore, uncollateralized short-term borrowings of $4 billion are recorded in that account in the Consolidated Balance Sheet.

Selected letters of credit and revolving loans hedged by credit default swaps or participation notes

        The Company has elected fair value option accounting for certain letters of credit that are hedged with derivative instruments or participation notes. Upon electing the fair value option, the related portions of the allowance for loan losses and the allowance for unfunded lending commitments were reversed. Citigroup elected the fair value option for these transactions because the risk is managed on a fair value basis, and to mitigate accounting mismatches

        The cumulative effect of $14 million pretax ($9 million after-tax) from adopting fair value option accounting was recorded as an increase in the January 1, 2007 retained earnings balance. The 2007 first quarter change in fair value for these items was a pretax gain of $1.7 million. This change in fair value as well as the receipt of related fees was reported as Principal transactions in the Company's Consolidated Statement of Income

        The notional amount of these unfunded letters of credit was $1.9 billion as of March 31, 2007. The amount funded was insignificant and, accordingly, no amounts were 90 days past due or on non-accrual status at March 31, 2007.

        These items have been classified in Trading account assets or Trading account liabilities on the Consolidated Balance Sheet.

Various miscellaneous eligible items

        Several miscellaneous eligible items currently classified as available-for-sale securities were selected for fair value option accounting. These items were selected in preparation for the adoption of the Investment Company Audit Guide SOP, as discussed above.

Other items for which the fair value option was selected

        The Company has elected fair value option for the following eligible items, which did not affect opening retained earnings but may impact future earnings:

•

Certain loan products



•

Certain investments in private equity and real estate ventures



•

Certain structured liabilities



•

Certain equity-method investments

Certain loan products

        Citigroup has elected the fair value option for certain originated and purchased loans, including certain unfunded loan products, such as guarantees and letters of credit, executed by Citigroup's trading businesses. Significant groups of transactions include loans and unfunded loan products that will either be sold or securitized in the near term, or where the economic risks are hedged with derivative instruments. Citigroup has elected the fair value option to mitigate accounting mismatches in cases where hedge accounting is complex or inappropriate; to align accounting with the transaction's business purpose; and to achieve operational simplifications. Fair value was not elected for most lending transactions across the Company, including where those management objectives would not be met.

        The balances for these loan products, which are classified with Trading account assets or Loans, were $15.7 billion and $1.1 billion as of March 31, 2007, respectively. The aggregate fair value exceeded the aggregate unpaid principal balance by $61 million as of March 31, 2007. $137 million of these loans were 90 days or more past due, while none were on a non-accrual basis. Upon electing the fair value option, the related portion of the Allowance for loan losses was reversed.

        The change in fair value for the selected loans, which was a pretax gain of $247 million during the 2007 first quarter, was recorded in Principal transactions in the Company's Consolidated Statement of Income. $224 million related to those loans classified in Trading account assets and $23 million to those classified in Loans. $185 million of this gain was offset by fair value losses recognized with hedging derivatives, which were primarily total return swaps. Substantially all of the $224 million change in fair value related to loans in Trading account assets is considered to be related to specific credit risk as substantially all of the related loans are floating rate, while none of the $23 million change applicable to those loans classified as such related to specific credit risk.

        Related interest income continues to be measured based on the contractual interest rates and reported as interest income on trading account assets or loans depending on their balance sheet classifications.

Certain investments in private equity and real estate ventures

        Citigroup invests in private equity and real estate ventures for the purpose of earning investment returns and for capital appreciation. The Company has elected the fair value option for certain of these ventures in anticipation of the January 2008 implementation of the Investment Company Audit Guide SOP, because such investments are considered similar to many private equity or hedge fund activities in our investment companies, which are reported at full fair value. See discussion of the SOP above. The fair value option brings

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consistency in the accounting and evaluation of certain of these investments. As required by SFAS 159, all investments (debt and equity) in such real estate entities are accounted for at fair value.

        These investments, which totaled $288 million as of March 31, 2007, are classified as Investments on Citigroup's Consolidated Balance Sheet. Changes in the fair value of these investments during the 2007 first quarter were classified in Other revenue as a loss of $3 million in the Company's Consolidated Statement of Income.

Certain structured liabilities

        The Company has elected the fair value option for certain structured liabilities whose performance is linked to structured interest rates, inflation or currency risks ("structured liabilities"), but do not qualify for the fair value election under SFAS 155. This election is applicable only to structured liabilities originated after January 1, 2007.

        The Company has elected fair value option for structured liabilities, because these exposures are considered to be trading-related positions and, therefore, are managed on a fair value basis. These positions will continue to be classified as debt, deposits or derivatives according to their legal structure on the Company's Consolidated Balance Sheet. The outstanding balance for these structured liabilities accounted for under the fair value option, which are classified as long-term debt on the Consolidated Balance Sheet, is $199 million as of March 31, 2007.

        The change in fair value for structured liabilities for which the fair value option has been elected was a pretax gain of $9 million during the 2007 first quarter. This gain was reported in Principal transactions in the Company's Consolidated Statement of Income.

        Related interest expense continues to be measured based on the contractual interest rates and reported as such in the Consolidated Income Statement.

        The difference between the aggregate fair value of structured liabilities for which the fair value option has been elected and the aggregate unpaid principal balance of such instruments is $9 million as of March 31, 2007.

Certain equity method investments

        Citigroup adopted fair value accounting for various non-strategic investments in leveraged buyout funds and other hedge funds that previously were required to be accounted for under the equity method. Management elected fair value accounting to reduce operational and accounting complexity, in particular related to the expected implementation of the Investment Company Audit Guide SOP. Because the funds account for all of their underlying assets at full fair value, the impact of applying the equity method to Citigroup's investment in these funds was equivalent to fair value accounting (that is, the net investment in the funds reported on Citigroup's Consolidated Balance Sheet will result in equal fair values for the investment in the fund on the balance sheet. In addition, Citigroup's proportionate share of the net income or loss of each fund reported on Citigroup's Consolidated Statement of Income in each period as equity income recognized under the equity method will equal the mark-to-market earnings on the income statement under fair value accounting). Thus, the fair value election had no impact on opening retained earnings.

        These fund investments, which totaled $961 million, are classified as Other Assets on the Consolidated Balance Sheet. Changes in fair value of these investments during the 2007 first quarter were classified in Other revenue as a pretax gain of $39 million in the Consolidated Statement of Income.

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17.   Guarantees

        The Company provides a variety of guarantees and indemnifications to Citigroup customers to enhance their credit standing and enable them to complete a wide variety of business transactions. The following table summarizes at March 31, 2007 and December 31, 2006 all of the Company's guarantees and indemnifications, where management believes the guarantees and indemnifications are related to an asset, liability, or equity security of the guaranteed parties at the inception of the contract. The maximum potential amount of future payments represents the notional amounts that could be lost under the guarantees and indemnifications if there were a total default by the guaranteed parties, without consideration of possible recoveries under recourse provisions or from collateral held or pledged. Such amounts bear no relationship to the anticipated losses on these guarantees and indemnifications and greatly exceed anticipated losses.

        The following tables present information about the Company's guarantees at March 31, 2007 and December 31, 2006:

	Maximum Potential Amount of Future Payments
In billions of dollars at March 31, except carrying value in millions	Expire Within 1 Year		Expire After 1 Year		Total Amount Outstanding		Carrying Value (in millions)
2007
Financial standby letters of credit	$	57.9	$	25.7	$	83.6	$	117.4
Performance guarantees		11.3		4.6		15.9		47.5
Derivative instruments		29.8		982.7		1,012		21,630
Loans sold with recourse		—		1.6		1.6		50.9
Securities lending indemnifications(1)		144.2		—		144.2		—
Credit card merchant processing(1)		54.2		—		54.2		—
Custody indemnifications(1)		—		55.6		55.6		—
Total	$	297.4	$	1,070.2	$	1,367.6	$	21,845.8

	Maximum Potential Amount of Future Payments
In billions of dollars at December 31, except carrying value in millions	Expire Within 1 Year		Expire After 1 Year		Total Amount Outstanding		Carrying Value (in millions)
2006
Financial standby letters of credit(2)	$	46.7	$	25.8	$	72.5	$	179.3
Performance guarantees(2)		11.2		4.6		15.8		47.2
Derivative instruments		42.0		916.6		958.6		16,836.0
Loans sold with recourse		—		1.6		1.6		51.9
Securities lending indemnifications(1)		110.7		—		110.7		—
Credit card merchant processing(1)		52.3		—		52.3		—
Custody indemnifications(1)		—		54.4		54.4		—
Total	$	262.9	$	1,003.0	$	1,265.9	$	17,114.4

(1)

The carrying values of securities lending indemnifications, credit card merchant processing, and custody indemnifications are not material as the Company has determined that the amount and probability of potential liabilities arising from these guarantees are not significant and the carrying amount of the Company's obligations under these guarantees is immaterial.

(2)

Reclassified to conform to the current period's presentation.

        Financial standby letters of credit include guarantees of payment of insurance premiums and reinsurance risks that support industrial revenue bond underwriting and settlement of payment obligations to clearing houses, and that support options and purchases of securities or in lieu of escrow deposit accounts. Financial standbys also backstop loans, credit facilities, promissory notes and trade acceptances. Performance guarantees and letters of credit are issued to guarantee a customer's tender bid on a construction or systems installation project or to guarantee completion of such projects in accordance with contract terms. They are also issued to support a customer's obligation to supply specified products, commodities, or maintenance or warranty services to a third party.

        Derivative instruments include credit default swaps, total return swaps, written foreign exchange options, written put options, and written equity warrants. Loans sold with recourse represent the Company's obligations to reimburse the buyers for loan losses under certain circumstances. Securities lending indemnifications are issued to guarantee that a securities lending customer will be made whole in the event that the security borrower does not return the security subject to the lending agreement and collateral held is insufficient to cover the market value of the security. Credit card merchant processing guarantees represent the Company's indirect obligations in connection with the processing of private label and bankcard transactions on behalf of merchants. Custody indemnifications are issued to guarantee that custody clients will be made whole in the event that a third-party subcustodian fails to safeguard clients' assets. Beginning with the 2006 third quarter, the scope of the custody indemnifications was broadened to cover all clients' assets held by third-party subcustodians.

        Citigroup's primary credit card business is the issuance of credit cards to individuals. In addition, the Company provides transaction processing services to various merchants with respect to bankcard and private label cards. In the event of a billing dispute with respect to a bankcard transaction between a merchant and a cardholder, that is ultimately resolved in the cardholder's favor, the third party holds the primary

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contingent liability to credit or refund the amount to the cardholder and charge back the transaction to the merchant. If the third party is unable to collect this amount from the merchant, it bears the loss for the amount of the credit or refund paid to the cardholder.

        The Company continues to have the primary contingent liability with respect to its portfolio of private label merchants. The risk of loss is mitigated as the cash flows between the third party or the Company and the merchant are settled on a net basis and the third party or the Company has the right to offset any payments with cash flows otherwise due to the merchant. To further mitigate this risk, the third party or the Company may require a merchant to make an escrow deposit, delay settlement, or include event triggers to provide the third party or the Company with more financial and operational control in the event of the financial deterioration of the merchant, or require various credit enhancements (including letters of credit and bank guarantees). In the unlikely event that a private label merchant is unable to deliver products, services or a refund to its private label cardholders, Citigroup is contingently liable to credit or refund cardholders. In addition, although a third party holds the primary contingent liability with respect to the processing of bankcard transactions, in the event that the third party does not have sufficient collateral from the merchant or sufficient financial resources of its own to provide the credit or refunds to the cardholders, Citigroup would be liable to credit or refund the cardholders.

        The Company's maximum potential contingent liability related to both bankcard and private label merchant processing services is estimated to be the total volume of credit card transactions that meet the requirements to be valid chargeback transactions at any given time. At March 31, 2007 and December 31, 2006, this maximum potential exposure was estimated to be $54 billion and $52 billion, respectively.

        However, the Company believes that the maximum exposure is not representative of the actual potential loss exposure, based on the Company's historical experience and its position as a secondary guarantor (in the case of bankcards). In most cases, this contingent liability is unlikely to arise, as most products and services are delivered when purchased and amounts are refunded when items are returned to merchants. The Company assesses the probability and amount of its contingent liability related to merchant processing based on the financial strength of the primary guarantor (in the case of bankcards) and the extent and nature of unresolved chargebacks and its historical loss experience. At March 31, 2007 and December 31, 2006, the estimated losses incurred and the carrying amounts of the Company's contingent obligations related to merchant processing activities were immaterial.

        In addition, the Company, through its credit card business, provides various cardholder protection programs on several of its card products, including programs that provide insurance coverage for rental cars, coverage for certain losses associated with purchased products, price protection for certain purchases and protection for lost luggage. These guarantees are not included in the table above, since the total outstanding amount of the guarantees and the Company's maximum exposure to loss cannot be quantified. The protection is limited to certain types of purchases and certain types of losses and it is not possible to quantify the purchases that would qualify for these benefits at any given time. Actual losses related to these programs were not material during the first quarters of 2007 and 2006. The Company assesses the probability and amount of its potential liability related to these programs based on the extent and nature of its historical loss experience. At March 31, 2007, the estimated losses incurred and the carrying value of the Company's obligations related to these programs were immaterial.

        In the normal course of business, the Company provides standard representations and warranties to counterparties in contracts in connection with numerous transactions and also provides indemnifications that protect the counterparties to the contracts in the event that additional taxes are owed due either to a change in the tax law or an adverse interpretation of the tax law. Counterparties to these transactions provide the Company with comparable indemnifications. While such representations, warranties and tax indemnifications are essential components of many contractual relationships, they do not represent the underlying business purpose for the transactions. The indemnification clauses are often standard contractual terms related to the Company's own performance under the terms of a contract and are entered into in the normal course of business based on an assessment that the risk of loss is remote. Often these clauses are intended to ensure that terms of a contract are met at inception (for example, that loans transferred to a counterparty in a sales transaction did in fact meet the conditions specified in the contract at the transfer date). No compensation is received for these standard representations and warranties, and it is not possible to determine their fair value because they rarely, if ever, result in a payment. In many cases, there are no stated or notional amounts included in the indemnification clauses and the contingencies potentially triggering the obligation to indemnify have not occurred and are not expected to occur. There are no amounts reflected on the Consolidated Balance Sheet as of March 31, 2007 and December 31, 2006, related to these indemnifications and they are not included in the table above.

        In addition, the Company is a member of or shareholder in hundreds of value transfer networks (VTNs) (payment, clearing and settlement systems as well as securities exchanges) around the world. As a condition of membership, many of these VTNs require that members stand ready to backstop the net effect on the VTNs of a member's default on its obligations. The Company's potential obligations as a shareholder or member of VTN associations are excluded from the scope of FIN 45, since the shareholders and members represent subordinated classes of investors in the VTNs. Accordingly, the Company's participation in VTNs is not reported in the table above and there are no amounts reflected on the Consolidated Balance Sheet as of March 31, 2007 or December 31, 2006 for potential obligations that could arise from the Company's involvement with VTN associations.

        At March 31, 2007 and December 31, 2006, the carrying amounts of the liabilities related to the guarantees and indemnifications included in the table above amounted to approximately $22 billion and $17 billion, respectively. The carrying value of derivative instruments is included in either trading liabilities or other liabilities, depending upon whether the derivative was entered into for trading or non-trading purposes. The carrying value of financial and performance guarantees is included in other liabilities. For loans sold with

112

recourse, the carrying value of the liability is included in other liabilities. In addition, at March 31, 2007 and December 31, 2006, other liabilities on the Consolidated Balance Sheet include an allowance for credit losses of $1.1 billion, relating to letters of credit and unfunded lending commitments.

        In addition to the collateral available in respect of the credit card merchant processing contingent liability discussed above, the Company has collateral available to reimburse potential losses on its other guarantees. Cash collateral available to the Company to reimburse losses realized under these guarantees and indemnifications amounted to $105 billion and $92 billion at March 31, 2007 and December 31, 2006, respectively. Securities and other marketable assets held as collateral amounted to $55 billion and $42 billion and letters of credit in favor of the Company held as collateral amounted to $160 million and $142 million at March 31, 2007 and December 31, 2006, respectively. Other property may also be available to the Company to cover losses under certain guarantees and indemnifications; however, the value of such property has not been determined.

18.   Contingencies

        As described in the "Legal Proceedings" discussion on page 122, the Company has been a defendant in numerous lawsuits and other legal proceedings arising out of alleged misconduct in connection with:

(i)

underwritings for, and research coverage of, WorldCom;



(ii)

underwritings for Enron and other transactions and activities related to Enron;



(iii)

transactions and activities related to research coverage of companies other than WorldCom; and



(iv)

transactions and activities related to the IPO Securities Litigation.

��       As of March 31, 2007, the Company's litigation reserve for these matters, net of amounts previously paid or not yet paid but committed to be paid in connection with the Enron class action settlement and other settlements arising out of these matters, was approximately $3.2 billion.

        The Company believes that this reserve is adequate to meet all of its remaining exposure for these matters. However, in view of the large number of these matters, the uncertainties of the timing and outcome of this type of litigation, the novel issues presented, and the significant amounts involved, it is possible that the ultimate costs of these matters may exceed or be below the reserve. The Company will continue to defend itself vigorously in these cases, and seek to resolve them in the manner management believes is in the best interests of the Company.

        In addition, in the ordinary course of business, Citigroup and its subsidiaries are defendants or co-defendants or parties in various litigation and regulatory matters incidental to and typical of the businesses in which they are engaged. In the opinion of the Company's management, the ultimate resolution of these legal and regulatory proceedings would not be likely to have a material adverse effect on the consolidated financial condition of the Company but, if involving monetary liability, may be material to the Company's operating results for any particular period.

113

19.    Citibank, N.A. and Subsidiaries
Statement of Changes in Stockholder's Equity

	Three Months Ended March 31,
In millions of dollars, except shares	2007			2006(1)
Common stock ($20 par value)
Balance, beginning of period — Shares: 37,534,553 in 2007 and 2006	$	751		$	751
Balance, end of period — Shares: 37,534,553 in 2007 and 2006	$	751		$	751
Surplus
Balance, beginning of period	$	43,753		$	37,978
Capital contribution from parent company		2,030			170
Employee benefit plans		11			36
Other		—			4
Balance, end of period	$	45,794		$	38,188
Retained earnings
Balance, beginning of period	$	30,358		$	24,062
Adjustment to opening balance, net of tax(2)		(96	)		—
Adjusted balance, beginning of period	$	30,262		$	24,062
Net income		2,155			2,632
Dividends paid		(18	)		(1,308	)
Balance, end of period	$	32,399		$	25,386
Accumulated other comprehensive income (loss)
Balance, beginning of period	$	(1,709	)	$	(2,550	)
Adjustment to opening balance, net of tax(3)		(1	)		—
Adjusted balance, beginning of period	$	(1,710	)	$	(2,550	)
Net change in unrealized gains (losses) on investment securities, available-for-sale, net of tax		130			(130	)
Net change in foreign currency translation adjustment, net of tax		141			313
Net change for cash flow hedges, net of tax		(270	)		144
Pension liability adjustment, net of tax		67			4
Net change in Accumulated other comprehensive income	$	68		$	331
Balance, end of period	($	1,642	)	($	2,219	)
Total stockholder's equity
Balance, beginning of period	$	73,153		$	60,241
Adjustment to opening balance, net of tax(2) (3)		(97	)		—
Adjusted balance, beginning of period	$	73,056		$	60,241
Changes during the period, net		4,246			1,865
Balance, end of period	$	77,302		$	62,106
Comprehensive income
Net income	$	2,155		$	2,632
Net change in Accumulated other comprehensive income (loss)		68			331
Total comprehensive income	$	2,223		$	2,963

(1)

The March 31, 2006 Statement of Changes in Stockholder's Equity for Citibank, N.A. and Subsidiaries has been restated in accordance with SFAS No. 141, "Business Combinations" (SFAS 141), to reflect the impact of the bank consolidation project in which several affiliates were transferred between Citibank, N.A. and other affiliates under the common control of Citigroup. See Note 20 on page 114 for a full description of the bank consolidation project.

(2)

The adjustment to opening balance for retained earnings is the sum of the after-tax amounts for the adoption of the following accounting pronouncements:

•

SFAS 157 for $9 million,

•

SFAS 159 for $15 million,

•

FSP 13-2 for ($142) million, and

•

FIN 48 for $22 million.

See Note 1 and Note 16 on pages 85 and 105, respectively.

(3)

The after-tax adjustment to the opening balance of Accumulated other comprehensive income (loss) represents the reclassification of the unrealized gains (losses) related to several miscellaneous items previously reported in accordance with SFAS 115. The related unrealized gains and losses were reclassified to retained earnings upon the adoption of the fair value option in accordance with SFAS 159. See Note 1 and Note 16 on pages 85 and 105 for further discussions.

114

20.    Condensed Consolidating Financial Statement Schedules

        These condensed consolidating financial statement schedules are presented for purposes of additional analysis but should be considered in relation to the consolidated financial statements of Citigroup taken as a whole.

Bank Consolidation Project

        During 2006, Citigroup began and completed a majority of its bank consolidation project, which called for the merger of its 12 U.S.-insured depository institutions into four, as well as the reorganization of its U.S. mortgage banking business. The first phase of this project was completed in July 2006, when CitiFinancial Credit Company (CCC), an indirect wholly owned subsidiary of Citigroup, transferred its ownership of Citicorp Trust Bank, fsb to Citigroup. The second phase occurred in October 2006, when Citigroup reduced its overall number of U.S.-insured depository institutions from twelve to five. Also during this phase, Citibank, N.A. transferred its investment in Citibank (South Dakota), N.A. (the Company's primary banking entity responsible for U.S. credit card activities) to Citigroup. In addition, a majority of the Company's U.S. consumer mortgage lending activity was consolidated within Citibank, N.A. as Citibank (West), FSB, Citibank Texas, N.A., Citibank, FSB and Citibank Delaware were merged into Citibank, N.A. The final phase of this consolidation project is expected to be completed at a later date with the merger of Citibank (Banamex USA) into Citibank, N.A.

Citigroup Parent Company

        The holding company, Citigroup Inc.

Citigroup Global Markets Holdings Inc. (CGMHI)

        Citigroup guarantees various debt obligations of CGMHI as well as all of the outstanding debt obligations under CGMHI's publicly-issued debt.

Citigroup Funding Inc. (CFI)

        CFI is a first-tier subsidiary of Citigroup, which issues commercial paper, medium-term notes and structured equity-linked and credit-linked notes, all of which are guaranteed by Citigroup.

CitiFinancial Credit Company (CCC)

        An indirect wholly owned subsidiary of Citigroup. CCC is a wholly owned subsidiary of Associates. Citigroup has issued a full and unconditional guarantee of the outstanding indebtedness of CCC.

Associates First Capital Corporation (Associates)

        A wholly owned subsidiary of Citigroup. Citigroup has issued a full and unconditional guarantee of the outstanding long-term debt securities and commercial paper of Associates. In addition, Citigroup guaranteed various debt obligations of Citigroup Finance Canada Inc. (CFCI), a wholly owned subsidiary of Associates. CFCI continues to issue debt in the Canadian market supported by a Citigroup guarantee. Associates is the immediate parent company of CCC.

Other Citigroup Subsidiaries

        Includes all other subsidiaries of Citigroup, intercompany eliminations, and income/loss from discontinued operations.

Consolidating Adjustments

        Includes Citigroup parent company elimination of distributed and undistributed income of subsidiaries, investment in subsidiaries and the elimination of CCC, which is included in the Associates column.

115

CONDENSED CONSOLIDATING STATEMENT OF INCOME

	Three Months Ended March 31, 2007
In millions of dollars	Citigroup parent company			CGMHI		CFI			CCC		Associates			Other Citigroup subsidiaries, eliminations and income from discontinued operations			Consolidating adjustments			Citigroup Consolidated
Revenues
Dividends from subsidiary banks and bank holding companies	$	2,805		$	—	$	—		$	—	$	—		$	—		$	(2,805	)	$	—
Interest revenue		97			7,282		—			1,524		1,791			18,962			(1,524	)		28,132
Interest revenue—intercompany		1,284			295		1,245			37		123			(2,947	)		(37	)		—
Interest expense		1,790			5,722		891			46		181			8,978			(46	)		17,562
Interest expense—intercompany		(13	)		1,170		191			496		660			(2,008	)		(496	)		—
Net interest revenue	$	(396	)	$	685	$	163		$	1,019	$	1,073		$	9,045		$	(1,019	)	$	10,570
Commissions and fees	$	—		$	3,018	$	—		$	18	$	41		$	2,714		$	(18	)	$	5,773
Commissions and fees—intercompany		—			25		—			5		5			(30	)		(5	)		—
Principal transactions		6			895		(128	)		—		—			2,224			—			2,997
Principal transactions—intercompany		3			112		1			—		—			(116	)		—			—
Other income		26			1,120		52			107		146			4,775			(107	)		6,119
Other income—intercompany		41			382		(44	)		7		(16	)		(363	)		(7	)		—
Total non-interest revenues	$	76		$	5,552	$	(119	)	$	137	$	176		$	9,204		$	(137	)	$	14,889
Total revenues, net of interest expense	$	2,485		$	6,237	$	44		$	1,156	$	1,249		$	18,249		$	(3,961	)	$	25,459
Provisions for credit losses and for benefits and claims	$	—		$	7	$	—		$	426	$	478		$	2,482		$	(426	)	$	2,967
Expenses
Compensation and benefits	$	21		$	3,613	$	—		$	160	$	214		$	4,851		$	(160	)	$	8,699
Compensation and benefits—intercompany		2			—		—			40		41			(43	)		(40	)		—
Other expense		114			988		—			155		206			5,564			(155	)		6,872
Other expense—intercompany		26			425		21			77		95			(567	)		(77	)		—
Total operating expenses	$	163		$	5,026	$	21		$	432	$	556		$	9,805		$	(432	)	$	15,571
Income from continuing operations before taxes, minority interest and equity in undistributed income of subsidiaries	$	2,322		$	1,204	$	23		$	298	$	215		$	5,962		$	(3,103	)	$	6,921
Income taxes (benefits)		(241	)		361		9			106		64			1,669			(106	)		1,862
Minority interest, net of taxes		—			—		—			—		—			47			—			47
Equities in undistributed income of subsidiaries		2,449			—		—			—		—			—			(2,449	)		—
Income from continuing operations	$	5,012		$	843	$	14		$	192	$	151		$	4,246		$	(5,446	)	$	5,012
Income from discontinued operations, net of taxes		—			—		—			—		—			—			—			—
Net income	$	5,012		$	843	$	14		$	192	$	151		$	4,246		$	(5,446	)	$	5,012

116

CONDENSED CONSOLIDATING STATEMENT OF INCOME

	Three Months Ended March 31, 2006
In millions of dollars	Citigroup parent company			CGMHI			CFI			CCC			Associates		Other Citigroup subsidiaries, eliminations and income from discontinued operations			Consolidating adjustments			Citigroup Consolidated
Revenues
Dividends from subsidiary banks and bank holding companies	$	2,453		$	—		$	—		$	—		$	—	$	—		$	(2,453	)	$	—
Interest revenue		91			5,409			—			1,399			1,659		14,714			(1,399	)		21,873
Interest revenue—intercompany		927			109			569			(18	)		79		(1,684	)		18			—
Interest expense		1,329			4,094			428			52			181		6,075			(52	)		12,107
Interest expense—intercompany		(33	)		561			130			350			524		(1,182	)		(350	)		—
Net interest revenue	$	(278	)	$	863		$	11		$	979		$	1,033	$	8,137		$	(979	)	$	9,766
Commissions and fees	$	—		$	2,377		$	—		$	14		$	38	$	2,773		$	(14	)	$	5,188
Commissions and fees—intercompany		—			77			—			11			11		(88	)		(11	)		—
Principal transactions		16			1,466			(123	)		—			—		758			—			2,117
Principal transactions—intercompany		15			(336	)		130			—			—		191			—			—
Other income		503			1,073			65			113			162		3,309			(113	)		5,112
Other income—intercompany		(434	)		214			(68	)		5			3		285			(5	)		—
Total non-interest revenues	$	100		$	4,871		$	4		$	143		$	214	$	7,228		$	(143	)	$	12,417
Total revenues, net of interest expense	$	2,275		$	5,734		$	15		$	1,122		$	1,247	$	15,365		$	(3,575	)	$	22,183
Provisions for credit losses and for benefits and claims	$	—		$	21		$	—		$	295		$	337	$	1,315		$	(295	)	$	1,673
Expenses
Compensation and benefits	$	(5	)	$	3,467		$	—		$	198		$	247	$	4,554		$	(198	)	$	8,263
Compensation and benefits—intercompany		2			—			—			35			36		(38	)		(35	)		—
Other expense		36			907			—			149			191		3,961			(149	)		5,095
Other expense—intercompany		34			443			20			45			62		(559	)		(45	)		—
Total operating expenses	$	67		$	4,817		$	20		$	427		$	536	$	7,918		$	(427	)	$	13,358
Income from continuing operations before taxes, minority interest and equity in undistributed income of subsidiaries	$	2,208		$	896		$	(5	)	$	400		$	374	$	6,132		$	(2,853	)	$	7,152
Income taxes (benefits)		(206	)		265			(2	)		125			66		1,414			(125	)		1,537
Minority interest, net of taxes		—			—			—			—			—		60			—			60
Equities in undistributed income of subsidiaries		3,225			—			—			—			—		—			(3,225	)		—
Income from continuing operations	$	5,639		$	631		$	(3	)	$	275		$	308	$	4,658		$	(5,953	)	$	5,555
Income from discontinued operations, net of taxes		—			(6	)		—			—			—		90			—			84
Net income	$	5,639		$	625		$	(3	)	$	275		$	308	$	4,748		$	(5,953	)	$	5,639

117

CONDENSED CONSOLIDATING BALANCE SHEET

	March 31, 2007
In millions of dollars	Citigroup parent company		CGMHI			CFI		CCC			Associates			Other Citigroup subsidiaries and eliminations			Consolidating adjustments			Citigroup Consolidated
Assets
Cash and due from banks	$	—	$	4,206		$	17	$	184		$	286		$	19,912		$	(184	)	$	24,421
Cash and due from banks—intercompany		29		534			—		147			157			(720	)		(147	)		—
Federal funds sold and resale agreements		—		292,729			—		—			—			11,196			—			303,925
Federal funds sold and resale agreements—intercompany		—		9,124			—		—			—			(9,124	)		—			—
Trading account assets		37		342,504			—		—			37			117,487			—			460,065
Trading account assets—intercompany		352		6,755			766		—			8			(7,881	)		—			—
Investments		8,604		—			—		2,348			2,883			275,080			(2,348	)		286,567
Loans, net of unearned income		—		945			—		44,900			53,765			638,634			(44,900	)		693,344
Loans, net of unearned income—intercompany		—		—			35,623		7,996			10,234			(45,857	)		(7,996	)		—
Allowance for loan losses		—		(63	)		—		(959	)		(1,106	)		(8,341	)		959			(9,510	)
Total loans, net	$	—	$	882		$	35,623	$	51,937		$	62,893		$	584,436		$	(51,937	)	$	683,834
Advances to subsidiaries		94,225		—			—		—			—			(94,225	)		—			—
Investments in subsidiaries		151,077		—			—		—			—			—			(151,077	)		—
Other assets		8,770		70,692			59		5,193			6,702			175,931			(5,193	)		262,154
Other assets—intercompany		4,461		15,091			62,415		270			392			(82,359	)		(270	)		—
Total assets	$	267,555	$	742,517		$	98,880	$	60,079		$	73,358		$	989,733		$	(211,156	)	$	2,020,966
Liabilities and stockholders' equity
Deposits	$	—	$	—		$	—	$	—		$	—		$	738,521		$	—		$	738,521
Federal funds purchased and securities loaned or sold		—		347,232			—		—			—			46,438			—			393,670
Federal funds purchased and securities loaned or sold—intercompany		1,624		3,454			—		—			—			(5,078	)		—			—
Trading account liabilities		5		131,093			196		—			—			42,608			—			173,902
Trading account liabilities—intercompany		90		3,081			222		—			—			(3,393	)		—			—
Short-term borrowings		28		18,997			41,681		266			1,196			49,277			(266	)		111,179
Short-term borrowings—intercompany		—		59,595			28,458		10,526			27,054			(115,107	)		(10,526	)		—
Long-term debt		134,915		28,419			24,465		2,776			13,422			109,547			(2,776	)		310,768
Long-term debt—intercompany		30		26,170			2,106		33,258			22,298			(50,604	)		(33,258	)		—
Advances from subsidiaries		528		—			—		—			—			(528	)		—			—
Other liabilities		7,013		96,796			121		1,892			1,665			65,248			(1,892	)		170,843
Other liabilities—intercompany		1,239		7,772			207		438			231			(9,449	)		(438	)		—
Stockholders' equity		122,083		19,908			1,424		10,923			7,492			122,253			(162,000	)		122,083
Total liabilities and stockholders' equity	$	267,555	$	742,517		$	98,880	$	60,079		$	73,358		$	989,733		$	(211,156	)	$	2,020,966

118

CONDENSED CONSOLIDATING BALANCE SHEET

	December 31, 2006
In millions of dollars	Citigroup parent company		CGMHI			CFI		CCC			Associates			Other Citigroup subsidiaries and eliminations			Consolidating adjustments			Citigroup Consolidated
Assets
Cash and due from banks	$	—	$	3,752		$	—	$	216		$	313		$	22,449		$	(216	)	$	26,514
Cash and due from banks—intercompany		21		669			—		172			190			(880	)		(172	)		—
Federal funds sold and resale agreements		—		269,949			—		—			—			12,868			—			282,817
Federal funds sold and resale agreements—intercompany		—		5,720			—		—			—			(5,720	)		—			—
Trading account assets		38		281,290			—		—			36			112,561			—			393,925
Trading account assets—intercompany		224		6,257			1		—			9			(6,491	)		—			—
Investments		9,088		—			—		2,290			2,808			261,695			(2,290	)		273,591
Loans, net of unearned income		—		932			—		44,809			53,614			624,646			(44,809	)		679,192
Loans, net of unearned income—Intercompany		—		—			36,206		8,116			11,234			(47,440	)		(8,116	)		—
Allowance for loan losses		—		(60	)		—		(954	)		(1,099	)		(7,781	)		954			(8,940	)
Total loans, net	$	—	$	872		$	36,206	$	51,971		$	63,749		$	569,425		$	(51,971	)	$	670,252
Advances to subsidiaries		90,112		—			—		—			—			(90,112	)		—			—
Investments in subsidiaries		146,904		—			—		—			—			—			(146,904	)		—
Other assets		8,234		66,761			552		4,708			6,208			155,464			(4,708	)		237,219
Other assets—intercompany		2,969		16,153			51,343		260			388			(70,853	)		(260	)		—
Total assets	$	257,590	$	651,423		$	88,102	$	59,617		$	73,701		$	960,406		$	(206,521	)	$	1,884,318
Liabilities and stockholders' equity
Deposits	$	—	$	—		$	—	$	—		$	—		$	712,041		$	—		$	712,041
Federal funds purchased and securities loaned or sold		—		304,470			—		—			—			44,765			—			349,235
Federal funds purchased and securities loaned or sold—intercompany		1,910		2,283			—		—			—			(4,193	)		—			—
Trading account liabilities		5		106,174			51		—			—			39,657			—			145,887
Trading account liabilities—Intercompany		128		2,829			93		—			—			(3,050	)		—			—
Short-term borrowings		32		14,102			43,345		1,201			3,137			40,217			(1,201	)		100,833
Short-term borrowings—intercompany		—		47,178			22,494		9,739			24,130			(93,802	)		(9,739	)		—
Long-term debt		125,350		28,719			18,847		2,904			13,222			102,356			(2,904	)		288,494
Long-term debt—intercompany		399		24,038			1,644		33,050			24,349			(50,430	)		(33,050	)		—
Advances from subsidiaries		2,565		—			—		—			—			(2,565	)		—			—
Other liabilities		6,246		95,113			139		1,362			1,194			65,353			(1,362	)		168,045
Other liabilities—intercompany		1,172		6,498			179		628			334			(8,183	)		(628	)		—
Stockholders' equity		119,783		20,019			1,310		10,733			7,335			118,240			(157,637	)		119,783
Total liabilities and stockholders' equity	$	257,590	$	651,423		$	88,102	$	59,617		$	73,701		$	960,406		$	(206,521	)	$	1,884,318

119

Condensed Consolidating Statements of Cash Flows

	Three Months Ended March 31, 2007
In millions of dollars	Citigroup parent company			CGMHI			CFI			CCC			Associates			Other Citigroup subsidiaries and eliminations			Consolidating adjustments			Citigroup Consolidated
Net cash provided by (used in) operating activities of continuing operations	$	849		$	(17,858	)	$	73		$	710		$	1,255		$	(2,736	)	$	(710	)	$	(18,417	)
Cash flows from investing activities
Change in loans	$	—		$	(13	)	$	—		$	(769	)	$	(883	)	$	(71,517	)	$	769		$	(72,413	)
Proceeds from sales and securitizations of loans		—			—			—			—			—			61,333			—			61,333
Purchases of investments		(4,147	)		—			—			(173	)		(401	)		(76,681	)		173			(81,229	)
Proceeds from sales of investments		1,688			—			—			50			121			37,208			(50	)		39,017
Proceeds from maturities of investments		2,966			—			—			71			218			31,209			(71	)		34,393
Changes in investments and advances—intercompany		(4,113	)		—			(10,537	)		121			606			14,044			(121	)		—
Business acquisitions		—			—			—			—			—			(2,353	)		—			(2,353	)
Other investing activities		—			1,757			—			—			—			(4,409	)		—			(2,652	)
Net cash (used in) provided by investing activities	$	(3,606	)	$	1,744		$	(10,537	)	$	(700	)	$	(339	)	$	(11,166	)	$	700		$	(23,904	)
Cash flows from financing activities
Dividends paid	$	(2,698	)	$	—		$	—		$	—		$	—		$	—		$	—		$	(2,698	)
Dividends paid—intercompany		—			(1,036	)		—			—			—			1,036			—			—
Issuance of common stock		394			—			—			—			—			—			—			394
Treasury stock acquired		(645	)		—			—			—			—			—			—			(645	)
Proceeds/(Repayments) from issuance of long-term debt—third-party, net		8,943			(1,967	)		6,080			(128	)		195			(3,884	)		128			9,367
Proceeds/(Repayments) from issuance of long-term debt—intercompany, net		(369	)		2,124			—			208			(2,051	)		296			(208	)		—
Change in deposits		—			—			—			—			—			24,902			—			24,902
Net change in short-term borrowings and other investment banking and brokerage borrowings—third-party		(4	)		4,895			(2,019	)		(934	)		(1,941	)		8,787			934			9,718
Net change in short-term borrowings and other advances—intercompany		(2,037	)		12,417			6,320			787			2,821			(19,521	)		(787	)		—
Capital contributions from parent		—			—			100			—			—			(100	)		—			—
Other financing activities		(819	)		—			—			—			—			—			—			(819	)
Net cash provided by (used in) financing activities	$	2,765		$	16,433		$	10,481		$	(67	)	$	(976	)	$	11,516		$	67		$	40,219
Effect of exchange rate changes on cash and due from banks	$	—		$	—		$	—		$	—		$	—		$	9		$	—		$	9
Net increase (decrease) in cash and due from banks	$	8		$	319		$	17		$	(57	)	$	(60	)	$	(2,377	)	$	57		$	(2,093	)
Cash and due from banks at beginning of period		21			4,421			—			388			503			21,569			(388	)		26,514
Cash and due from banks at end of period from continuing operations	$	29		$	4,740		$	17		$	331		$	443		$	19,192		$	(331	)	$	24,421
Supplemental disclosure of cash flow information
Cash paid during the year for:
Income taxes	$	(61	)	$	644		$	(20	)	$	34		$	25		$	1,238		$	(34	)	$	1,826
Interest		1,718			6,921			1,078			738			116			5,499			(738	)		15,332
Non-cash investing activities:
Transfers to repossessed assets	$	—		$	—		$	—		$	308		$	315		$	138		$	(308	)	$	453

120

Condensed Consolidating Statements of Cash Flows

	Three Months Ended March 31, 2006
In millions of dollars	Citigroup parent company			CGMHI			CFI			CCC			Associates			Other Citigroup subsidiaries and eliminations			Consolidating adjustments			Citigroup Consolidated
Net cash provided by (used in) operating activities of continuing operations	$	1,781		$	4,101		$	(103	)	$	897		$	1,591		$	(4,200	)	$	(897	)	$	3,170
Cash flows from investing activities
Change in loans	$	—		$	(97	)	$	—		$	300		$	357		$	(86,080	)	$	(300	)	$	(85,820	)
Proceeds from sales and securitizations of loans		—			—			—			—			—			63,397			—			63,397
Purchases of investments		(8,136	)		—			—			(2,054	)		(2,630	)		(52,659	)		2,054			(63,425	)
Proceeds from sales of investments		520			—			—			341			542			16,382			(341	)		17,444
Proceeds from maturities of investments		6,000			—			—			1,634			2,083			24,319			(1,634	)		32,402
Changes in investments and advances—intercompany		(2,509	)		—			(3,234	)		7			345			5,398			(7	)		—
Business acquisitions		—			(9	)		—			—			—			9			—			—
Other investing activities		—			(481	)		—			—			—			(1,488	)		—			(1,969	)
Net cash (used in) provided by investing activities	$	(4,125	)	$	(587	)	$	(3,234	)	$	228		$	697		$	(30,722	)	$	(228	)	$	(37,971	)
Cash flows from financing activities
Dividends paid	$	(2,491	)	$	—		$	—		$	—		$	—		$	—		$	—		$	(2,491	)
Dividends paid-intercompany		—			(620	)		—			—			(35	)		655			—			—
Issuance of common stock		258			—			—			—			—			—			—			258
Redemption or retirement of preferred stock		(125	)		—			—			—			—			—			—			(125	)
Treasury stock acquired		(2,000	)		—			—			—			—			—			—			(2,000	)
Proceeds/(Repayments) from issuance of long-term debt—third-party, net		6,222			(4,353	)		5,126			(119	)		(114	)		3,734			119			10,615
Proceeds/(Repayments) from issuance of long-term debt—intercompany, net		516			1,725			—			(420	)		(1,398	)		(843	)		420			—
Change in deposits		—			—			—			(1	)		—			35,530			1			35,530
Net change in short-term borrowings and other investment banking and brokerage borrowings—third-party		(1	)		(2,457	)		(7,766	)		(1,520	)		(1,208	)		2,632			1,520			(8,800	)
Net change in short-term borrowings and other advances—intercompany		397			1,700			5,495			767			343			(7,935	)		(767	)		—
Capital contributions from parent		—			—			482			108			35			(517	)		(108	)		—
Other financing activities		(569	)		—			—			1			1			(1	)		(1	)		(569	)
Net cash provided by (used in) financing activities	$	2,207		$	(4,005	)	$	3,337		$	(1,184	)	$	(2,376	)	$	33,255		$	1,184		$	32,418
Effect of exchange rate changes on cash and due from banks	$	—		$	—		$	—		$	—		$	—		$	162		$	—		$	162
Net decrease in cash and due from banks	$	(137	)	$	(491	)	$	—		$	(59	)	$	(88	)	$	(1,505	)	$	59		$	(2,221	)
Cash and due from banks at beginning of period		247			3,913			1			687			876			18,595			(687	)		23,632
Cash and due from banks at end of period from continuing operations	$	110		$	3,422		$	1		$	628		$	788		$	17,090		$	(628	)	$	21,411
Supplemental disclosure of cash flow information
Cash paid during the year for:
Income taxes	$	33		$	1,526		$	—		$	(23	)	$	(10	)	$	(532	)	$	23		$	1,017
Interest		1,206			4,478			524			167			122			4,820			(167	)		11,150
Non-cash investing activities:
Transfers to repossessed assets	$	—		$	—		$	—		$	278		$	284		$	74		$	(278	)	$	358

121

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

        The following information supplements and amends our discussion set forth under Part I, Item 3 "Legal Proceedings" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006.

Enron Corp.

        Following the decision of the Court of Appeals for the Fifth Circuit on March 19, 2007, reversing the District Court's certification of a class in NEWBY, et al. v. ENRON CORP., et al., the District Court, on March 20, 2007, stayed all actions coordinated or consolidated with NEWBY in which plaintiffs asserted claims under Section 10(b) of the Securities Exchange Act of 1934 against financial institutions.

Research

Telecommunications Research Class Actions.

        On March 23, 2007, the District Court approved Citigroup's settlement of a putative class action, LOS ANGELES CITY EMPLOYEES RETIREMENT ASSOCIATION v. CITIGROUP, which asserted claims under the Securities Exchange Act of 1934 concerning Salomon Smith Barney's equity research coverage of Focal Communications.

Customer Class Actions.

        In DISHER V. CITIGROUP GLOBAL MARKETS INC., on March 2, 2007, the District Court vacated its 2005 order dismissing the case and remanded the action to Illinois state court.

Parmalat

        On March 9, 2007, the New Jersey Superior Court, Appellate Division, denied Citigroup's motion for leave to appeal the denial of its renewed motion to dismiss the complaint in BONDI V. CITIGROUP on the ground of forum non conveniens. On March 26, 2007, Citigroup filed a motion for leave to appeal with the New Jersey Supreme Court; that motion is pending.

IPO Securities Litigation

        On April 6, 2007, the Second Circuit panel that reversed the district court's class certification decision denied plaintiffs' petition for rehearing. The companion petition for rehearing en banc remains pending before the Second Circuit.

Other

        In IN RE: CITIGROUP PENSION PLAN ERISA LITIGATION, on April 4, 2007, the District Court denied defendants' motion for entry of a partial final judgment, for permission to file an interlocutory appeal from the summary judgment order, and for a stay of proceedings.

        In CARROLL v. WEILL, ET AL., the New York Supreme Court held fairness hearings on the proposed settlement on February 28 and March 1, 2007.

Item 1A. Risk Factors

        There are no material changes from the risk factors set forth under Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006.

122

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(c)   Share Repurchases

        Under its long-standing repurchase program (which was expanded by $10 billion in the 2006 second quarter as noted below), the Company buys back common shares in the market or otherwise from time to time. The program is used for many purposes, including to offset dilution from stock-based compensation programs.

        The following table summarizes the Company's share repurchases during the first three months of 2007:

In millions, except per share amounts		Total Shares Repurchased	Average Price Paid per Share		Dollar Value of Remaining Authorized Repurchase Program
January 2007
	Open market repurchases(1)	2.9	$	54.49	$	7,254
	Employee transactions(2)	6.8	$	54.53		N/A
February 2007
	Open market repurchases	7.3	$	53.71	$	6,860
	Employee transactions	0.4	$	54.29		N/A
March 2007
	Open market repurchases	1.9	$	50.29	$	6,767
	Employee transactions	0.9	$	54.76		N/A
First Quarter 2007
	Open market repurchases	12.1	$	53.37	$	6,767
	Employee transactions	8.1	$	54.55		N/A
Total First Quarter 2007		20.2	$	53.85	$	6,767

(1)

All open market repurchases were transacted under an existing authorized share repurchase plan. On April 17, 2006, the Board of Directors authorized up to an additional $10 billion in share repurchases.

(2)

Consists of shares added to treasury stock related to activity on employee stock option program exercises, where the employee delivers existing shares to cover the option exercise, or under the Company's employee restricted or deferred stock program, where shares are withheld to satisfy tax requirements.

N/A Not applicable

123

Item 4. Submission of Matters to a Vote of Security Holders

        Citigroup's Annual Meeting of Stockholders was held on April 17, 2007. At the meeting:

(1)

14 persons were elected to serve as directors of Citigroup;



(2)

the selection of KPMG LLP to serve as the independent registered public accounting firm of Citigroup for 2007 was ratified;



(3)

a stockholder proposal requesting a report on prior governmental service of certain individuals was defeated;



(4)

a stockholder proposal requesting a report on political contributions was defeated;



(5)

a stockholder proposal requesting a report on charitable contributions was defeated;



(6)

a stockholder proposal requesting an advisory resolution to ratify executive compensation was defeated;



(7)

a stockholder proposal requesting that the Chairman of the Board have no management duties, titles or responsibilities was defeated;



(8)

a stockholder proposal requesting cumulative voting was defeated; and



(9)

a stockholder proposal requesting that stockholders have the right to call special shareholder meetings was approved.

The number of votes cast for, against or withheld, and the number of abstentions with respect to each such matter is set forth below, as are the number of broker non-votes, where applicable.

	FOR	AGAINST	ABSTAIN	BROKER NON-VOTES
(1) Election of Directors:
NOMINEE
C. Michael Armstrong	4,150,454,249	120,163,488	46,861,332
Alain J.P. Belda	4,160,910,252	109,707,763	46,866,535
George David	4,202,727,104	67,919,899	46,837,554
Kenneth T. Derr	4,134,957,833	162,251,923	20,274,788
John M. Deutch	4,152,146,631	117,721,359	47,616,561
Roberto Hernández Ramirez	4,169,798,806	100,482,090	47,203,847
Klaus Kleinfeld	4,175,239,630	95,279,329	46,965,638
Andrew N. Liveris	4,202,761,803	67,658,587	47,064,399
Anne Mulcahy	4,177,473,457	94,917,447	45,093,864
Richard D. Parsons	4,005,464,792	266,702,615	45,319,797
Charles Prince	4,119,288,816	152,244,657	45,951,307
Judith Rodin	4,195,276,630	75,715,601	46,492,549
Robert E. Rubin	4,165,193,389	109,962,087	42,327,965
Franklin A. Thomas	4,156,669,331	112,119,979	48,689,224
(2)    Ratification of         Independent Registered Public         Accounting Firm	4,172,091,417	107,811,429	37,583,440
(3)    Stockholder         Proposal Requesting a Report on Prior         Governmental Service of         Certain Individuals	171,435,798	2,826,567,343	479,202,952	840,272,976
(4)    Stockholder         Proposal Requesting a Report on         Political Contributions	875,138,389	2,008,231,317	593,887,347	840,222,016

124

	FOR	AGAINST	ABSTAIN	BROKER NON-VOTES
(5)    Stockholder         Proposal Requesting a Report on         Charitable Contributions	264,111,642	2,677,424,647	535,670,167	840,272,613
(6)    Stockholder         Proposal Requesting an Advisory         Resolution to Ratify Executive         Compensation	1,474,115,104	1,713,686,408	238,551,235	891,126,322
(7)    Stockholder         Proposal Requesting that the Chairman         of the Board Have no Management Duties,         Titles or Responsibilities	716,308,894	2,709,442,838	51,502,618	840,224,719
(8)    Stockholder         Proposal Requesting Cumulative Voting	622,349,193	2,800,531,750	54,388,525	840,209,601
(9)    Stockholder Proposal         Requesting that Stockholders         Have the Right to Call Special         Shareholder Meetings	2,071,546,407	1,245,612,951	160,087,812	840,231,899

125

Item 6. Exhibits

        See Exhibit Index.

126

SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 4th day of May, 2007.

CITIGROUP INC. (Registrant)
By	/s/  GARY CRITTENDEN      Gary Crittenden Chief Financial Officer (Principal Financial Officer)
By	/s/  JOHN C. GERSPACH      John C. Gerspach Controller and Chief Accounting Officer (Principal Accounting Officer)

127

EXHIBIT INDEX

Exhibit Number	Description of Exhibit
3.01.1	Restated Certificate of Incorporation of Citigroup Inc. (the Company), incorporated by reference to Exhibit 4.01 to the Company's Registration Statement on Form S-3 filed December 15, 1998 (No. 333-68949).
3.01.2	Certificate of Designation of 5.321% Cumulative Preferred Stock, Series YY, of the Company, incorporated by reference to Exhibit 4.45 to Amendment No. 1 to the Company's Registration Statement on Form S-3 filed January 22, 1999 (No. 333-68949).
3.01.3	Certificate of Amendment to the Restated Certificate of Incorporation of the Company dated April 18, 2000, incorporated by reference to Exhibit 3.01.3 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2000 (File No. 1-9924).
3.01.4	Certificate of Amendment to the Restated Certificate of Incorporation of the Company dated April 17, 2001, incorporated by reference to Exhibit 3.01.4 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2001 (File No. 1-9924).
3.01.5	Certificate of Designation of 6.767% Cumulative Preferred Stock, Series YYY, of the Company, incorporated by reference to Exhibit 3.01.5 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2001 (File 1-9924).
3.01.6	Certificate of Amendment to the Restated Certificate of Incorporation of the Company dated April 18, 2006, incorporated by reference to Exhibit 3.01.6 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2006 (File No. 1-9924).
3.02	By-Laws of the Company, as amended, effective January 17, 2007, incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed January 19, 2007 (File No. 1-9924).
10.01+	Letter Agreement, dated as of February 23, 2007, between the Company and Gary Crittenden.
12.01+	Calculation of Ratio of Income to Fixed Charges.
12.02+	Calculation of Ratio of Income to Fixed Charges (including preferred stock dividends).
31.01+	Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.02+	Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.01+	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.01+	Residual Value Obligation Certificate.

The total amount of securities authorized pursuant to any instrument defining rights of holders of long-term debt of the Company does not exceed 10% of the total assets of the Company and its consolidated subsidiaries. The Company will furnish copies of any such instrument to the Securities and Exchange Commission upon request.

+    Filed herewith

128

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