<Page>
EXHIBIT 99.01
THE COMPANY
Citigroup Inc. (Citigroup and, together with its subsidiaries, the Company) is a
diversified global financial services holding company whose businesses provide a
broad range of financial services to consumer and corporate customers with 192
million customer accounts in over 100 countries and territories. Citigroup was
incorporated in 1998 under the laws of the State of Delaware.
The Company's activities are conducted through Global Consumer, Global
Corporate and Investment Bank (GCIB), Global Investment Management, and
Proprietary Investment Activities.
The Company is a bank-holding company within the meaning of the U.S. Bank
Holding Company Act of 1956 (BHC Act) registered with, and subject to
examination by, the Federal Reserve Board (FRB). Certain of the Company's
subsidiaries are subject to supervision and examination by their respective
federal and state authorities.
At December 31, 2001, the Company had approximately 145,000 full-time and
4,000 part-time employees in the United States and approximately 123,000
employees outside of the United States.
The periodic reports of Citicorp, Salomon Smith Barney Holdings Inc., The
Student Loan Corporation (STU), The Travelers Insurance Company (TIC), and
Travelers Life and Annuity Company (TLAC), subsidiaries of the Company that make
filings pursuant to the Securities Exchange Act of 1934, as amended (the
Exchange Act), provide additional business and financial information concerning
those companies and their consolidated subsidiaries.
The principal executive offices of the Company are located at 399 Park
Avenue, New York, New York 10043, telephone number 212-559-1000. Additional
information is available on the Company's web site at
(http://www.citigroup.com).
GLOBAL CONSUMER
GLOBAL CONSUMER delivers a wide array of banking, lending, insurance and
investment services through a network of local branches, offices and electronic
delivery systems, including ATMs, ALMs (Automated Lending Machines) and the
World Wide Web. The Global Consumer businesses serve individual consumers as
well as small proprietorships. Global Consumer includes CARDS, CONSUMER FINANCE
and RETAIL BANKING.
CARDS provides MasterCard, VISA and private label credit and charge cards.
North America Cards includes the operations of Citi Cards, the company's primary
brand in North America, as well as Diners Club N.A. and Mexico Cards.
International Cards provides credit and charge cards to customers in Western
Europe, Japan, Asia, CEEMEA, and Latin America.
CONSUMER FINANCE provides community-based lending services through branch
networks, regional sales offices and cross-selling initiatives with other
Citigroup businesses. The business of CitiFinancial is included in North America
Consumer Finance. As of December 31, 2001, North America Consumer Finance
maintained 2,413 offices, including 2,221 CitiFinancial offices in the U.S. and
Canada, while International Consumer Finance maintained 1,150 offices, including
877 in Japan. CONSUMER FINANCE offers real estate-secured loans, unsecured and
partially secured personal loans, auto loans and loans to finance consumer goods
purchases. In addition, CitiFinancial, through certain subsidiaries and third
parties, makes available various credit-related and other insurance products to
its U.S. Consumer Finance customers.
RETAIL BANKING provides banking, lending, investment and insurance services
to customers through retail branches and electronic delivery systems. In North
America, RETAIL BANKING includes the operations of Citibanking North America,
Consumer Assets, Primerica Financial Services (Primerica) and Mexico Retail
Banking. Citibanking North America delivers banking, lending, investment and
insurance services through 460 branches in the U.S. and Puerto Rico and through
Citibank Online, an Internet banking site on the World Wide Web. The Consumer
Assets business originates and services mortgages and student loans for
customers across the U.S. The business operations of Primerica involve the sale,
mainly in North America, of life insurance and other products manufactured by
its affiliates, including Smith Barney mutual funds, CitiFinancial mortgages and
personal loans and the products of LIFE INSURANCE AND ANNUITIES. The Primerica
sales force is composed of over 100,000 independent representatives. Mexico
Retail Banking consists of the branch banking operations of Banamex.
International Retail Banking provides full-service banking and investment
services in Western Europe, Japan, Asia, CEEMEA and Latin America.
GLOBAL CORPORATE AND INVESTMENT BANK
THE GLOBAL CORPORATE AND INVESTMENT BANK provides corporations,
governments, institutions and investors in over 100 countries and territories
with a broad range of financial products and services, including investment
advice, financial planning and retail brokerage services, as well as banking and
financial services. The Global Corporate and Investment Bank includes CAPITAL
MARKETS AND BANKING, PRIVATE CLIENT and TRANSACTION SERVICES.
CAPITAL MARKETS AND BANKING offers a wide array of investment banking and
commercial banking services and products, including the underwriting and
distribution of fixed income and equity securities for U.S. and multinational
corporations and for state, local and other governmental and
government-sponsored authorities. In addition, CAPITAL MARKETS AND BANKING also
provides capital raising, advisory, research and other brokerage services to its
customers, acts as a market-maker and executes securities and commodities
futures brokerage transactions on all major U.S. and international exchanges on
behalf of customers and for its own account. CAPITAL MARKETS AND BANKING is a
major participant in foreign exchange and in the over-the-counter (OTC) market
for derivative instruments involving a wide range of products, including
interest rate, equity and currency swaps, caps and floors, options, warrants and
other derivative products. It also creates and sells various types of structured
securities. CAPITAL MARKETS AND BANKING also provides loans, leasing and
equipment finance. The primary businesses in CAPITAL MARKETS AND BANKING include
Fixed Income, Equities, Investment Banking, Sales & Trading (which mainly
operates in Asia, Latin America, CEEMEA and Mexico), CitiCapital and Lending.
PRIVATE CLIENT provides investment advice, financial planning and brokerage
services to affluent individuals, small and mid-size companies, non-profits and
large corporations by leveraging a network of more than 12,800 Smith Barney
Financial Consultants in more than 500 offices worldwide. A significant portion
of PRIVATE CLIENT's revenue is generated from the commissions earned as a broker
for its clients in the purchase and sale of securities. PRIVATE CLIENT generates
additional revenue by financing customers' securities transactions through
secured margin lending. PRIVATE CLIENT also receives commissions and other sales
and service revenues through the sale of proprietary mutual funds and
third-party mutual funds.
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TRANSACTION SERVICES is composed of e-Business and Global Securities
Services (GSS). e-Business provides comprehensive cash management, trade finance
and e-commerce services for corporations and financial institutions worldwide.
GSS provides custody services to investors such as insurance companies and
pension funds, clearing services to intermediaries such as broker/dealers and
depository and agency and trust services to multinational corporations and
governments globally.
GLOBAL INVESTMENT MANAGEMENT
GLOBAL INVESTMENT MANAGEMENT offers a broad range of life insurance,
annuity, asset management and personalized wealth management products and
services distributed to institutional, high net worth and retail clients. Global
Investment Management includes LIFE INSURANCE AND ANNUITIES, PRIVATE BANK, and
ASSET MANAGEMENT.
LIFE INSURANCE AND ANNUITIES includes Travelers Life and Annuity (TLA) and
International Insurance Manufacturing. These businesses offer individual
annuity, group annuity, individual life insurance and corporate owned life
insurance (COLI) products. The individual products include fixed and variable
deferred annuities, payout annuities, and term and universal life insurance.
These products are primarily distributed through Citigroup's businesses, a
nationwide network of independent agents and unaffiliated broker dealers. The
COLI product is a variable universal life product distributed through
independent specialty brokers. The group annuity products offered include
institutional pension products, including guaranteed investment contracts,
payout annuities, structured finance, and group annuities to U.S.
employer-sponsored retirement and savings plans through direct sales and various
intermediaries. The International Insurance Manufacturing business primarily has
operations in Western Europe, Latin America, Mexico and Asia.
PRIVATE BANK provides personalized wealth management services for high net
worth clients through 90 offices in 29 countries and territories, generating fee
and interest income from investment funds management and customer trading
activity, trust and fiduciary services, custody services, and traditional
banking and lending activities. Through its Private Bankers and Product
Specialists, PRIVATE BANK leverages its extensive experience with clients' needs
and its access to Citigroup to provide clients with comprehensive investment and
banking services.
ASSET MANAGEMENT includes the businesses of Citigroup Asset Management,
Citigroup Alternative Investments, Banamex asset management and retirement
services and Citigroup's other retirement services businesses in North America
and Latin America. Clients include private and public retirement plans,
endowments, foundations, banks, central banks, insurance companies, other
corporations, government agencies and high net worth and other individuals.
Client relationships may be introduced through the cross marketing and
distribution channels within Citigroup, through ASSET MANAGEMENT's own sales
force or through independent sources.
PROPRIETARY INVESTMENT ACTIVITIES
PROPRIETARY INVESTMENT ACTIVITIES comprises Citigroup's venture capital
activities, realized investment gains (losses) from sales or write-downs of
certain insurance-related investments, results from certain proprietary
investments, the results of certain investments in countries that refinanced
debt under the 1989 Brady Plan or plans of a similar nature, and, since August
2001, the Banamex investment portfolio.
CORPORATE/OTHER
CORPORATE/OTHER includes net corporate treasury results, corporate
expenses, certain intersegment eliminations, Internet-related development
activities, and taxes not allocated to the individual businesses.
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CITIGROUP INC. AND SUBSIDIARIES
FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA
<Table>
<Caption>
IN MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS 2001(1) 2000(1) 1999(1) 1998(1) 1997(1)
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REVENUES, NET OF INTEREST EXPENSE(2) $ 67,367 $ 63,572 $ 54,809 $ 44,964 $ 43,467
Operating expenses 36,528 35,809 31,049 28,852 26,958
Benefits, claims and credit losses(2) 10,320 8,466 7,513 6,841 5,971
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INCOME FROM CONTINUING OPERATIONS BEFORE TAXES,
MINORITY INTEREST AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGES 20,519 19,297 16,247 9,271 10,538
Income taxes 7,203 7,027 6,027 3,420 3,890
Minority interest, net of income taxes 87 39 27 5 -
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INCOME FROM CONTINUING OPERATIONS 13,229 12,231 10,193 5,846 6,648
INCOME FROM DISCONTINUED OPERATIONS(3) 1,055 1,288 1,177 1,104 1,034
CUMULATIVE EFFECT OF ACCOUNTING CHANGES(4) (158) - (127) - -
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NET INCOME $ 14,126 $ 13,519 $ 11,243 $ 6,950 $ 7,682
==================================================================================================================================
EARNINGS PER SHARE(5)
BASIC EARNINGS PER SHARE:
Income from continuing operations $ 2.61 $ 2.43 $ 2.02 $ 1.13 $ 1.27
Net income 2.79 2.69 2.23 1.35 1.48
DILUTED EARNINGS PER SHARE:
Income from continuing operations 2.55 2.37 1.96 1.10 1.23
Net income 2.72 2.62 2.17 1.31 1.42
Dividends declared per common share(5)(6) $ 0.600 $ 0.520 $ 0.405 $ 0.277 $ 0.200
==================================================================================================================================
AT DECEMBER 31,
Total assets $ 1,051,450 $ 902,210 $ 795,584 $ 740,336 $ 755,167
Total deposits 374,525 300,586 261,573 229,413 199,867
Long-term debt 121,631 111,778 88,481 86,250 75,605
Mandatorily redeemable securities of subsidiary
trusts 7,125 4,920 4,920 4,320 2,995
Redeemable preferred stock - - - 140 280
Common stockholders' equity 79,722 64,461 56,395 48,761 44,610
Total stockholders' equity 81,247 66,206 58,290 51,035 47,956
==================================================================================================================================
Ratio of earnings to fixed charges
and preferred stock dividends 1.63x 1.52x 1.55x 1.29x 1.36x
Return on average common stockholders' equity(7) 19.7% 22.4% 21.5% 14.4% 17.5%
Common stockholders' equity to assets 7.58% 7.14% 7.09% 6.59% 5.91%
Total stockholders' equity to assets 7.73% 7.34% 7.33% 6.89% 6.35%
==================================================================================================================================
</Table>
(1) Reclassified to conform to the 2002 presentation.
(2) Revenues, Net of Interest Expense, and Benefits, Claims, and Credit Losses
in the table above are disclosed on an owned basis (under Generally
Accepted Accounting Principles (GAAP)). If this table were prepared on a
managed basis, which includes certain effects of securitization activities
including receivables held for securitization and receivables sold with
servicing retained, there would be no impact to net income, but revenues,
net of interest expense, and benefits, claims, and credit losses would have
been increased by $3.568 billion, $2.459 billion, $2.707 billion, $2.364
billion and $1.734 billion in 2001, 2000, 1999, 1998 and 1997,
respectively. Although a managed basis presentation is not in conformity
with GAAP, it provides a representation of the volumes in the credit card
business.
(3) On August 20, 2002, Citigroup completed the distribution to its
stockholders of a majority portion of its remaining ownership interest in
Travelers Property Casualty (TPC). Following the distribution, Citigroup
began accounting for TPC as discontinued operations.
(4) Accounting changes in 2001 include the adoption of Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and
Hedging Activities," as amended (SFAS 133) of ($42) million and Emerging
Issues Task Force (EITF) Issue No. 99-20, "Recognition of Interest Income
and Impairment on Purchased and Retained Beneficial Interests in
Securitized Financial Assets" (EITF 99-20) of ($116) million. Accounting
changes in 1999 include the adoption of Statement of Position (SOP) 97-3,
"Accounting by Insurance and Other Enterprises for Insurance-Related
Assessments" of ($135) million; SOP 98-7, "Deposit Accounting: Accounting
for Insurance and Reinsurance Contracts That Do Not Transfer Insurance
Risk" of $23 million; and SOP 98-5, "Reporting on the Costs of Start-Up
Activities" of ($15) million.
(5) All amounts have been adjusted to reflect stock splits.
(6) Amounts prior to 1999 represent Travelers' historical dividends per common
share.
(7) The return on average common stockholders' equity is calculated using net
income after deducting preferred stock dividends.
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CITIGROUP INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
DISCONTINUED OPERATIONS
Travelers Property Casualty Corp. (TPC) (an indirect wholly-owned subsidiary of
Citigroup on December 31, 2001) sold 231 million shares of its class A common
stock representing approximately 23.1% of its outstanding equity securities in
an initial public offering (the IPO) on March 27, 2002. Citigroup recognized an
after-tax gain of $1.061 billion in the 2002 first quarter as a result of the
IPO. The after-tax gain was increased by $97 million in the 2002 third quarter
due to the receipt of a private letter ruling from the Internal Revenue Service
and the resolution of certain tax matters related to the IPO. In connection with
the IPO, Citigroup entered into an agreement with TPC that provides that, in any
fiscal year in which TPC records asbestos-related income statement charges in
excess of $150 million, net of any reinsurance, Citigroup will pay to TPC the
amount of any such excess up to a cumulative aggregate of $800 million, reduced
by the tax effect of the highest applicable federal income tax rate. A portion
of the gross IPO gain was deferred to offset any payments arising in connection
with this agreement. On October 16, 2002, notice was given that $159 million
will be payable in the 2002 fourth quarter, pursuant to this agreement.
On August 20, 2002, Citigroup completed the distribution to its
stockholders of a majority portion of its remaining ownership interest in TPC
(the distribution). This non-cash distribution was tax-free to Citigroup, its
stockholders and TPC. The distribution was treated as a dividend to stockholders
for accounting purposes that reduced Citigroup's Additional Paid-In Capital by
approximately $6.9 billion. Following the distribution, Citigroup remains a
holder of approximately 9.9% of TPC's outstanding equity securities which will
be carried at fair value in the Proprietary Investment Activities segment and
classified as available-for-sale within Investments on the Consolidated
Statement of Financial Position.
Following the August 20, 2002 distribution, the results of TPC are reported
in the Company's Statements of Income and Cash Flows separately as discontinued
operations. In accordance with generally accepted accounting principles (GAAP),
the Statement of Consolidated Financial Position has not been restated. TPC
represented the primary vehicle by which Citigroup engaged in the property and
casualty insurance business.
TPC primarily includes the results of its Personal Lines and Commercial
Lines businesses. The Personal Lines business of TPC primarily provides coverage
on personal automobile and homeowners insurance sold to individuals, which are
distributed through approximately 7,600 independent agencies located throughout
the United States. TPC's Commercial Lines business offers a broad array of
property and casualty insurance and insurance-related services, which it
distributes through approximately 6,300 brokers and independent agencies located
throughout the United States. TPC is the third largest writer of commercial
lines insurance in the U.S. based on 2001 direct written premiums published by
A.M. Best Company.
BUSINESS FOCUS
The following tables show the net income (loss) for Citigroup's businesses both
on a Product View and on a Regional View:
CITIGROUP NET INCOME -- PRODUCT VIEW
<Table>
<Caption>
IN MILLIONS OF DOLLARS 2001(1) 2000(1) 1999(1)
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GLOBAL CONSUMER
CARDS $ 2,536 $ 2,179 $ 1,664
CONSUMER FINANCE 1,905 1,365 1,184
RETAIL BANKING 2,508 1,957 1,659
Other (113) (91) 18
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TOTAL GLOBAL CONSUMER 6,836 5,410 4,525
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GLOBAL CORPORATE AND INVESTMENT BANK
CAPITAL MARKETS AND BANKING 3,887 3,567 3,334
PRIVATE CLIENT 767 1,068 914
TRANSACTION SERVICES 407 465 173
Other 52 (29) 33
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TOTAL GLOBAL CORPORATE
AND INVESTMENT BANK 5,113 5,071 4,454
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GLOBAL INVESTMENT MANAGEMENT
LIFE INSURANCE AND ANNUITIES 836 794 635
PRIVATE BANK 368 317 270
ASSET MANAGEMENT 392 349 338
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TOTAL GLOBAL INVESTMENT MANAGEMENT 1,596 1,460 1,243
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PROPRIETARY INVESTMENT ACTIVITIES(2) 318 1,340 583
CORPORATE/OTHER (634) (1,050) (612)
INCOME FROM CONTINUING OPERATIONS 13,229 12,231 10,193
INCOME FROM DISCONTINUED OPERATIONS(3) 1,055 1,288 1,177
CUMULATIVE EFFECT OF
ACCOUNTING CHANGES(4) (158) - (127)
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TOTAL NET INCOME $ 14,126 $ 13,519 $ 11,243
=========================================================================
</Table>
(1) Reclassified to conform to the 2002 presentation.
(2) Includes Realized Insurance Investment Portfolio Gains (Losses) primarily
from the LIFE INSURANCE AND ANNUITIES and Primerica businesses.
(3) On August 20, 2002, Citigroup completed the distribution to its
stockholders of a majority portion of its remaining ownership interest in
TPC. Following the distribution, Citigroup began accounting for TPC as
discontinued operations.
(4) Accounting changes in 2001 include the adoption of SFAS No. 133 of ($42)
million and EITF Issue No. 99-20 of ($116) million. Accounting changes in
1999 include the adoption of SOP 97-3 of ($135) million, SOP 98-7 of $23
million and SOP 98-5 of ($15) million.
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BUSINESS FOCUS
CITIGROUP NET INCOME -- REGIONAL VIEW(1)
<Table>
<Caption>
IN MILLIONS OF DOLLARS 2001(2) 2000(2) 1999(2)
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NORTH AMERICA (EXCLUDING MEXICO)
Consumer $ 4,562 $ 3,571 $ 3,236
Corporate 2,746 2,464 2,667
Investment Management 1,313 1,255 1,075
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TOTAL NORTH AMERICA
(EXCLUDING MEXICO) 8,621 7,290 6,978
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MEXICO(3)
Consumer 119 (60) 27
Corporate 101 96 57
Investment Management 73 27 13
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TOTAL MEXICO 293 63 97
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WESTERN EUROPE
Consumer 446 369 305
Corporate 509 697 443
Investment Management 4 (21) 6
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TOTAL WESTERN EUROPE 959 1,045 754
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JAPAN
Consumer 957 746 494
Corporate 97 348 130
Investment Management 33 17 23
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TOTAL JAPAN 1,087 1,111 647
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ASIA (EXCLUDING JAPAN)
Consumer 605 530 324
Corporate 617 547 427
Investment Management 79 53 33
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TOTAL ASIA 1,301 1,130 784
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LATIN AMERICA
Consumer 64 209 126
Corporate 542 524 489
Investment Management 63 94 70
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TOTAL LATIN AMERICA 669 827 685
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CENTRAL & EASTERN EUROPE,
MIDDLE EAST & AFRICA
Consumer 83 45 13
Corporate 501 395 241
Investment Management 31 35 23
--------------------------------
TOTAL CENTRAL & EASTERN EUROPE,
MIDDLE EAST & AFRICA 615 475 277
--------------------------------
PROPRIETARY INVESTMENT ACTIVITIES 318 1,340 583
CORPORATE /OTHER(4) (634) (1,050) (612)
INCOME FROM CONTINUING OPERATIONS 13,229 12,231 10,193
INCOME FROM DISCONTINUED OPERATIONS(5) 1,055 1,288 1,177
CUMULATIVE EFFECT OF ACCOUNTING
CHANGES (158) - (127)
--------------------------------
TOTAL NET INCOME $ 14,126 $ 13,519 $ 11,243
=========================================================================
</Table>
(1) Proprietary Investment Activities is centrally managed and not allocated to
any region.
(2) Reclassified to conform to the 2002 presentation.
(3) Mexico's results include the operations of Banamex from August 2001
forward.
(4) Operations of Corporate/Other are not allocated to any region; however,
they are primarily concentrated within North America (excluding Mexico).
(5) On August 20, 2002, Citigroup completed the distribution to its
stockholders of a majority portion of its remaining ownership interest in
TPC. Following the distribution, Citigroup began accounting for TPC as
discontinued operations.
INCOME AND EARNINGS PER SHARE
Citigroup reported 2001 net income of $14.126 billion or $2.72 per diluted
share, both up 4% from $13.519 billion or $2.62 per diluted share in 2000. Net
income in 2001 includes $282 million in after-tax restructuring- and
merger-related items and $158 million in after-tax charges reflecting the
cumulative effect of adopting SFAS 133 and EITF 99-20. Net income in 2000
includes $509 million in after-tax restructuring- and merger-related items. Net
income of $11.243 billion or $2.17 per diluted share in 1999 includes a release
of $25 million after-tax in restructuring-related items and an after-tax charge
of $127 million reflecting the cumulative effect of adopting several new
accounting standards. Return on common equity was 19.7% in 2001 compared to
22.4% for 2000 and 21.5% for 1999.
Income from continuing operations for 2001 of $13.229 billion or $2.55 per
diluted share were both up 8% from $12.231 billion or $2.37 per diluted share in
2000, and income from continuing operations in 1999 was $10.193 billion or $1.96
per diluted share.
Global Consumer net income increased $1.4 billion or 26% in 2001 led by
increases of $357 million or 16% in CARDS, $540 million or 40% in CONSUMER
FINANCE, and $551 million or 28% in RETAIL BANKING. GCIB increased $42 million
or 1% in 2001 reflecting increases in CAPITAL MARKETS AND BANKING and Other
Corporate, partially offset by decreases in PRIVATE CLIENT and TRANSACTION
SERVICES. Global Investment Management improved $136 million or 9% in 2001,
while Proprietary Investment Activities decreased $1.0 billion, primarily due to
lower venture capital results.
Net income growth of $2.3 billion or 20% in 2000 was led by Global Consumer
which improved $885 million or 20% from 1999, GCIB which increased $617 million
or 14%, Global Investment Management which improved $217 million or 17%, and
Proprietary Investment Activities which was up $757 million.
REVENUES, NET OF INTEREST EXPENSE
Revenues, net of interest expense of $67.4 billion in 2001 were up $3.8
billion or 6% from 2000. Revenues in 2000 were up $8.8 billion or 16% from 1999.
Global Consumer revenues in 2001 were up $4.0 billion or 14% from 2000 to $32.4
billion, including increases of $1.6 billion or 16% in RETAIL BANKING, $1.4
billion or 13% in CARDS and $1.1 billion or 15% in CONSUMER FINANCE. Global
Consumer revenues in 2000 increased $2.8 billion or 11% from 1999 to $28.3
billion, led by CARDS, up $1.6 billion or 17%, and the CONSUMER FINANCE
businesses, up $1.1 billion or 17%.
GCIB revenues of $26.7 billion in 2001 were up $504 million or 2% from
2000, led by increases of $1.3 billion or 8% in CAPITAL MARKETS AND BANKING and
$89 million or 3% in TRANSACTION SERVICES, partially offset by a decline in
PRIVATE CLIENT. In 2000, GCIB revenues of $26.2 billion were up $4.2 billion or
19% from 1999 reflecting increases in CAPITAL MARKETS AND BANKING of $2.7
billion or 20%, PRIVATE CLIENT of $977 million or 16% and TRANSACTION SERVICES
of $537 million or 19%.
Global Investment Management revenues increased $676 million or 9% in 2001,
and $1.2 billion or 19% in 2000 reflecting continued growth in assets under
management and business volumes for both years and the impact of acquisitions in
2000.
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SELECTED REVENUE ITEMS
Net interest revenue as calculated from the Consolidated Statement of
Income was $32.7 billion in 2001, up $6.4 billion or 24% from 2000, which was up
$1.9 billion or 8% from 1999 reflecting business volume growth in most markets
and the impact of acquisitions.
Total commissions, asset management and administration fees, and other fee
revenues of $21.0 billion were down $331 million or 2% in 2001 primarily
reflecting decreases in over-the-counter securities and mutual fund commissions
due to depressed market conditions, partially offset by the impact of
acquisitions. Insurance premiums of $3.5 billion in 2001 were up $214 million or
7% from year-ago levels and down $231 million or 7% in 2000.
Principal transactions revenues decreased in 2001 to $5.5 billion, from
$6.0 billion in 2000 and $5.2 billion in 1999 reflecting results in GCIB.
Realized gains from sales of investments of $237 million in 2001 were down from
$760 million in 2000, but were up from $429 million in 1999. The increase in
2000 resulted from gains on the exchange of certain Latin American bonds,
partially offset by losses in insurance-related investments. Other revenue of
$4.5 billion in 2001 decreased $1.5 billion from 2000, which was up $1.9 billion
from 1999. The 2001 decrease primarily reflected venture capital activity.
OPERATING EXPENSES
Operating expenses, which include restructuring- and merger-related items,
grew $719 million or 2% to $36.5 billion in 2001, and increased $4.8 billion or
15% from 1999 to 2000.
GCIB expenses were essentially flat to 2000 as the increases in CAPITAL
MARKETS AND BANKING and TRANSACTION SERVICES, as a result of acquisitions, and
other volume-related increases, was offset by a decrease in PRIVATE CLIENT as a
result of lower compensation and benefits and the impact of expense control
initiatives. Expenses increased in Global Consumer by 6% in 2001 and 9% in 2000
reflecting higher business volumes including acquisitions, partially offset in
2001 by savings resulting from the integration of Associates. Global Investment
Management expenses increased 5% in 2001 and 21% in 2000, driven by acquisitions
in 2001 and investments in sales and marketing activities, technology, and
product development in both years.
HOUSING FINANCE UNIT CHARGE
Included in other operating expenses for 2000 is a $71 million (after-tax)
charge associated with the discontinuation of the loan origination operations of
the Associates Housing Finance unit.
BENEFITS, CLAIMS AND CREDIT LOSSES
Benefits, claims and credit losses were $10.3 billion in 2001, up $1.9
billion or 22% from 2000, which was up $953 million or 13% from 1999.
Policyholder benefits and claims increased 13% to $3.5 billion in 2001 and 14%
to $3.1 billion in 2000 primarily as a result of increased volume in LIFE
INSURANCE AND ANNUITIES. The provision for credit losses increased 27% to $6.8
billion in 2001 and 12% to $5.3 billion in 2000.
Global Consumer provision for benefits, claims and credit losses of $6.1
billion were up 20% in 2001 and 7% in 2000. Net credit losses in 2001 were $5.4
billion and the related loss ratio was 2.31% compared with $4.4 billion and
2.11% in 2000 and $4.1 billion and 2.24% in 1999. The consumer loan delinquency
ratio (90 days or more past due) was 2.75% at the end of 2001, up from 1.83% and
2.09% at the end of 2000 and 1999.
GCIB benefits, claims and credit losses increased to $1.5 billion from $947
million in 2000, which was up from $542 million in 1999, resulting from
increases in CAPITAL MARKETS AND BANKING of $452 million offset by a decrease in
TRANSACTION SERVICES of $47 million.
Corporate cash-basis loans at December 31, 2001 and 2000 were $3.5 billion
and $2.0 billion, respectively. The increase in cash-basis loans was primarily
related to the acquisition of Banamex, the transportation portfolio, and
increases attributable to borrowers in the retail, telecommunication, energy and
utility industries.
CAPITAL
Total capital (Tier 1 and Tier 2) was $75.8 billion or 10.92% of
risk-adjusted assets, and Tier 1 capital was $58.4 billion or 8.42% at December
31, 2001, compared to $73.0 billion or 11.23% and $54.5 billion or 8.38% at
December 31, 2000.
The Net Income line in the following business segments and operating unit
discussions excludes the cumulative effect of accounting changes and income from
discontinued operations. The cumulative effect of accounting changes and income
from discontinued operations is disclosed within the Corporate/Other business
segment.
6
<Page>
GLOBAL CONSUMER
<Table>
<Caption>
IN MILLIONS OF DOLLARS 2001(1) 2000(1) 1999(1)
- -------------------------------------------------------------------------
REVENUES, NET OF INTEREST EXPENSE $ 32,365 $ 28,319 $ 25,477
Operating expenses 15,558 14,737 13,504
Provisions for benefits,
claims, and credit losses 6,096 5,063 4,720
--------------------------------
INCOME BEFORE TAXES
AND MINORITY INTEREST 10,711 8,519 7,253
Income taxes 3,848 3,090 2,709
Minority interest, after-tax 27 19 19
--------------------------------
NET INCOME $ 6,836 $ 5,410 $ 4,525
=========================================================================
</Table>
(1) Reclassified to conform to the 2002 presentation.
GLOBAL CONSUMER -- which provides banking, lending, including credit and
charge cards, investment and personal insurance products and services to
customers around the world -- reported net income of $6.836 billion in 2001, up
$1.426 billion or 26% from 2000, which, in turn, increased $885 million or 20%
from 1999, driven by double digit growth in CONSUMER FINANCE, RETAIL BANKING and
CARDS. CONSUMER FINANCE net income increased $540 million or 40% in 2001 mainly
reflecting revenue growth and expense savings in North America and higher
business volumes and the impact of acquisitions in Japan. CONSUMER FINANCE net
income increased $181 million or 15% in 2000 reflecting growth in the
international markets. RETAIL BANKING net income increased $551 million or 28%
in 2001 primarily reflecting revenue growth in North America including the
acquisitions of Banamex and European American Bank. RETAIL BANKING net income
increased $298 million or 18% in 2000 primarily due to revenue growth and lower
net credit losses. CARDS net income increased $357 million or 16% in 2001 mainly
reflecting growth in Citi Cards and the acquisition of Banamex. CARDS net income
increased $515 million or 31% in 2000 marked by strong performances in all
regions.
Global Consumer net income included restructuring-related charges of $127
million ($198 million pretax) in 2001, $144 million ($223 million pretax) in
2000, and $78 million ($120 million pretax) in 1999.
The table below shows net income by region for Global Consumer.
GLOBAL CONSUMER NET INCOME -- REGIONAL VIEW
<Table>
<Caption>
IN MILLIONS OF DOLLARS 2001(1) 2000(1) 1999(1)
- -------------------------------------------------------------------------
North America (excluding Mexico) $ 4,562 $ 3,571 $ 3,236
Mexico 119 (60) 27
Western Europe 446 369 305
Japan 957 746 494
Asia (excluding Japan) 605 530 324
Latin America 64 209 126
Central & Eastern Europe,
Middle East & Africa 83 45 13
--------------------------------
TOTAL NET INCOME $ 6,836 $ 5,410 $ 4,525
=========================================================================
</Table>
(1) Reclassified to conform to the 2002 presentation.
CARDS
<Table>
<Caption>
IN MILLIONS OF DOLLARS 2001(1) 2000(1) 1999(1)
- -------------------------------------------------------------------------
REVENUES, NET OF INTEREST EXPENSE $ 12,054 $ 10,703 $ 9,119
Operating expenses 5,499 5,343 4,721
Provision for credit losses 2,596 1,951 1,755
--------------------------------
INCOME BEFORE TAXES 3,959 3,409 2,643
Income taxes 1,423 1,230 979
--------------------------------
NET INCOME $ 2,536 $ 2,179 $ 1,664
=========================================================================
Average assets (IN BILLIONS OF
DOLLARS) 60 57 45
Return on assets 4.23% 3.82% 3.70%
=========================================================================
</Table>
(1) Reclassified to conform to the 2002 presentation.
CARDS - which includes bankcards, private-label cards and charge cards -
reported net income of $2.536 billion in 2001, up $357 million or 16% from 2000,
driven by growth in Citi Cards, prior-year restructuring-related items and the
acquisition of Banamex in August 2001, partially offset by declines resulting
from economic conditions in Argentina. Net income in 2000 was up $515 million or
31%, led by growth in Citi Cards, Asia and Latin America, which experienced
increased earnings in Credicard, a 33%-owned Brazilian Card affiliate.
As shown in the following table, average managed loans grew 10% in 2001,
mainly reflecting growth in Citi Cards and Mexico, which included the effect of
the Banamex acquisition. In the international markets, receivable growth in Asia
was partially offset by credit risk management initiatives and the negative
impact of foreign currency translation in Latin America and the prior-year sale
of Diners Club franchises in Western Europe. Sales were unchanged in 2001 as the
negative impact of the events of September 11th and the sale of Diners Club
franchises in Western Europe were partially offset by the addition of Banamex.
Increases in 2000 were mainly due to portfolio acquisitions in Citi Cards.
<Table>
<Caption>
IN BILLIONS OF DOLLARS 2001(1) 2000(1) 1999(1)
- -------------------------------------------------------------------------
SALES
North America $ 233.2 $ 231.4 $ 200.4
International 32.4 34.2 33.4
--------------------------------
TOTAL SALES $ 265.6 $ 265.6 $ 233.8
AVERAGE MANAGED LOANS
North America $ 104.6 $ 94.0 $ 81.7
International 10.0 9.8 8.7
--------------------------------
TOTAL AVERAGE MANAGED LOANS $ 114.6 $ 103.8 $ 90.4
=========================================================================
</Table>
(1) Reclassified to conform to the 2002 presentation.
Revenues, net of interest expense, of $12.054 billion in 2001 increased
$1.351 billion or 13% from 2000, primarily reflecting spread improvement due to
lower cost of funds and repricing actions, combined with the benefit of
receivable growth and the acquisition of Banamex. These increases were partially
offset by estimated translation losses of $111 million associated with the
re-denomination of certain consumer loans in Argentina as well as the impact of
the Diners Club sale in Western Europe. Revenues of $10.703 billion in 2000
increased $1.584 billion or 17% from 1999 primarily reflecting the benefit of
receivable growth and higher interchange fee revenues in Citi Cards combined
with the impact of the Diners Club acquisition in Japan.
Operating expenses of $5.499 billion in 2001 increased $156 million or 3%
from 2000 as volume-related increases and the addition of Banamex were partially
offset by disciplined expense management across all regions and the Diners Club
sale in Western Europe. Operating expenses in 2001 included net
restructuring-related charges
7
<Page>
of $16 million ($11 million after-tax), including a charge related to the
acquisition of Banamex that was partially offset by a release in Citi Cards
resulting from changes in estimates, compared to restructuring-related charges
of $96 million ($60 million after-tax) in 2000, mainly reflecting actions in
Citi Cards. In 2000, operating expenses of $5.343 billion grew $622 million or
13% from 1999, primarily due to increases in Citi Cards, related to
acquisitions, increased target-marketing efforts and restructuring-related
charges, and in Japan, resulting from the acquisition of Diners Club.
The provision for credit losses in 2001 was $2.596 billion compared to
$1.951 billion in 2000 and $1.755 billion in 1999. Net credit losses in 2001
were $2.596 billion with a related loss ratio of 5.63%, compared to $1.956
billion and 4.32% in 2000 and $1.709 billion and 4.65% in 1999. The increase in
the net credit loss ratio in 2001 primarily reflected increases in Citi Cards
which reflect current U.S. economic conditions including a rise in bankruptcy
filings. Loans delinquent 90 days or more were $1.006 billion or 2.10% of loans
at December 31, 2001, compared to $569 million or 1.15% at December 31, 2000 and
$623 million or 1.61% at December 31, 1999.
The securitization of credit card receivables is limited to the Citi Cards
business within North America. At December 31, 2001, securitized credit card
receivables were $67.0 billion, compared to $57.2 billion at December 31, 2000
and $55.6 billion at December 31, 1999. Credit card receivables held-for-sale
were $6.5 billion at December 31, 2001, compared to $8.1 billion and $2.1
billion at December 31, 2000 and 1999, respectively. Because securitization
changes Citigroup's role from that of a lender to that of a loan servicer, it
removes the receivables from Citigroup's balance sheet and affects the manner in
which revenue and the provision for credit losses are classified in the income
statement. For securitized receivables and receivables held-for-sale, amounts
that would otherwise be reported as net interest revenue, fee and commission
revenue, and credit losses on loans are instead reported as fee and commission
revenue (for servicing fees) and other revenue (for the remaining revenue, net
of credit losses). Because credit losses are a component of these cash flows,
revenues over the terms of these transactions may vary depending upon the credit
performance of the securitized receivables. However, Citigroup's exposure to
credit losses on the securitized receivables is contractually limited to the
cash flows from the receivables. Including securitized receivables and
receivables held-for-sale, net credit losses would have been $6.051 billion in
2001 with a related loss ratio of 5.28% compared to $4.367 billion and 4.21% in
2000 and $4.416 billion and 4.88% in 1999. Adjusting for securitization
activity, loans delinquent 90 days or more would have been $2.384 billion or
1.96% at December 31, 2001, compared to $1.671 billion or 1.46% at December 31,
2000 and $1.531 billion or 1.59% at December 31, 1999.
CONSUMER FINANCE
<Table>
<Caption>
IN MILLIONS OF DOLLARS 2001(1) 2000(1) 1999(1)
- -------------------------------------------------------------------------
REVENUES, NET OF INTEREST EXPENSE $ 8,838 $ 7,704 $ 6,601
Operating expenses 3,336 3,446 2,831
Provisions for benefits,
claims, and credit losses 2,499 2,127 1,880
--------------------------------
INCOME BEFORE TAXES 3,003 2,131 1,890
Income taxes 1,098 766 706
--------------------------------
NET INCOME $ 1,905 $ 1,365 $ 1,184
=========================================================================
Average assets (IN BILLIONS OF
DOLLARS) $ 84 $ 76 $ 64
Return on assets 2.27% 1.80% 1.85%
=========================================================================
</Table>
(1) Reclassified to conform to the 2002 presentation.
CONSUMER FINANCE - which provides community-based lending services through
branch networks, regional sales offices and cross-selling initiatives with other
Citigroup businesses - reported net income of $1.905 billion in 2001, up $540
million or 40% from 2000, primarily reflecting strong growth in North America
and Japan. The growth in North America was primarily due to growth in
receivables, efficiencies resulting from the integration of Associates and lower
cost of funds. The growth in Japan mainly reflected growth in loans and the
acquisition of Unimat in September 2000. Net income of $1.365 billion in 2000
grew $181 million or 15% from 1999 primarily reflecting growth in International
Consumer Finance of $176 million or 42% due to increases in Japan and Western
Europe, partially offset by a decline in Latin America.
As shown in the following table, average loans grew 15% in 2001 and 16% in
2000 resulting from higher volumes from CitiFinancial locations, the
cross-selling of products through Primerica and, in 2000, the impact of
acquisitions in the U.S. and Japan. At December 31, 2001, the portfolio
consisted of 62% real estate-secured loans, compared with 61% at December 31,
2000 and December 31, 1999.
<Table>
<Caption>
IN BILLIONS OF DOLLARS 2001 2000 1999
- -------------------------------------------------------------------------
AVERAGE LOANS
Real estate-secured loans $ 44.1 $ 37.8 $ 32.9
Personal 19.2 17.3 15.1
Auto 4.6 3.7 2.0
Sales finance and other 3.5 3.5 3.7
--------------------------------
TOTAL AVERAGE LOANS $ 71.4 $ 62.3 $ 53.7
=========================================================================
</Table>
As shown in the following table, the average net interest margin of 10.86% in
2001 increased 40 basis points from 2000 as lower cost of funds was partially
offset by continued growth in lower-risk real estate loans that have lower
yields. In North America, the average net interest margin was 8.19% in 2001,
increasing 18 basis points from the prior year as the benefit of lower cost of
funds was partially offset by lower yields, both reflecting a lower interest
rate environment. The average net interest margin for International Consumer
Finance was 22.13% in 2001, up 47 basis points from the prior year, primarily
reflecting an increase in yields that was partially offset by higher cost of
funds. The average net interest margin of 10.46% in 2000 increased 8 basis
points from 1999, as higher yields in International Consumer Finance were
partially offset by higher cost of funds and lower yields in the U.S.
<Table>
<Caption>
IN BILLIONS OF DOLLARS 2001 2000 1999
- -------------------------------------------------------------------------
AVERAGE NET INTEREST MARGIN
North America 8.19% 8.01% 8.45%
International 22.13% 21.66% 20.59%
TOTAL 10.86% 10.46% 10.38%
=========================================================================
</Table>
Revenues, net of interest expense, of $8.838 billion in 2001 increased
$1.134 billion or 15% from 2000. The increase in revenue reflected growth of 25%
in International Consumer Finance and 10% in North America. Revenue growth in
North America was primarily driven by strong growth in receivables and lower
cost of funds which was partially offset by lower yields, mainly due to a lower
interest rate environment. In International Consumer Finance, revenue growth in
Japan and Western Europe was partially offset by a decline in Latin America.
Revenue growth in Japan was primarily driven by increased receivables, including
the addition of Unimat, partially offset by the impact of foreign currency
translation and reduced spreads. Revenue growth in Western Europe reflected
higher volumes and spreads, partially offset by the effect of foreign currency
translation. The decline in Latin America was primarily due to estimated
translation losses of $62 million associated with the re-denomination of certain
consumer
8
<Page>
loans in Argentina. Revenues of $7.704 billion in 2000 increased $1.103
billion or 17% from 1999 reflecting the benefit of receivable growth in North
America and Japan, partially offset by the impact of foreign currency
translation in Japan.
Operating expenses of $3.336 billion in 2001 decreased $110 million or 3%
from 2000 reflecting benefits from the integration of Associates in the U.S., as
well as higher restructuring-related charges in 2000, partially offset by
increased expenses in Japan resulting from costs associated with expansion
efforts including the impact of acquisitions and higher business volumes.
Expenses of $3.446 billion in 2000 increased $615 million or 22% from 1999
reflecting higher business volumes, including the effects of acquisitions, and
restructuring-related charges. Operating expenses included restructuring-related
charges of $34 million ($20 million after-tax) in 2001, $108 million ($70
million after-tax) in 2000 and $10 million ($7 million after-tax) in 1999.
Restructuring-related charges were mainly due to actions in the U.S. in 2001 and
2000 and in Latin America in 1999.
The provisions for benefits, claims, and credit losses were $2.499 billion
in 2001, up from $2.127 billion in 2000 and $1.880 billion in 1999, primarily
reflecting increases in the U.S. and Japan. Net credit losses and the related
loss ratio were $2.213 billion and 3.10% in 2001, up from $1.845 billion and
2.96% in 2000 and $1.605 billion and 2.99% in 1999. In North America, net credit
losses were $1.527 billion and the related loss ratio was 2.65% in 2001,
compared to $1.339 billion and 2.61% in 2000, and $1.224 billion and 2.71% in
1999. Net credit losses in the U.S. in 2001 included losses of $76 million from
sales of certain under-performing loans, which were charged against the
allowance for credit losses and resulted in a 13 basis point increase to the net
credit loss ratio in North America. Net credit losses in International Consumer
Finance were $686 million and the related loss ratio was 5.01% in 2001, up from
$506 million and 4.58% in 2000 and $381 million and 4.48% in 1999. The increases
in net credit losses in 2001 and 2000 reflected increases in Japan that were
primarily due to higher loan volumes, including the impact of acquisitions, and,
in 2001, increased bankruptcy filings and deteriorating credit quality. Loans
delinquent 90 days or more were $2.243 billion or 3.04% of loans at December 31,
2001, compared to $1.435 billion or 2.15% at December 31, 2000 and $1.131
billion or 1.94% at December 31, 1999. The increase in delinquencies in 2001 was
primarily due to the alignment of credit and collection policies in the
Associates real estate portfolio in the U.S. to those at CitiFinancial. Net
credit losses and the related ratio may increase from 2001 as a result of
continued increases in bankruptcy filings and unemployment rates in the U.S. and
Japan. This is a forward-looking statement within the meaning of the Private
Securities Litigation Reform Act. See "Forward-Looking Statements" on page 17.
RETAIL BANKING
<Table>
<Caption>
IN MILLIONS OF DOLLARS 2001(1) 2000(1) 1999(1)
- -------------------------------------------------------------------------
REVENUES, NET OF INTEREST EXPENSE $ 11,281 $ 9,696 $ 9,213
Operating expenses 6,300 5,585 5,343
Provisions for benefits,
claims, and credit losses 1,061 980 1,188
--------------------------------
INCOME BEFORE TAXES
AND MINORITY INTEREST 3,920 3,131 2,682
Income taxes 1,385 1,155 1,004
Minority interest, net of tax 27 19 19
--------------------------------
NET INCOME $ 2,508 $ 1,957 $ 1,659
=========================================================================
Average assets (IN BILLIONS OF
DOLLARS) $ 139 $ 110 $ 105
Return on assets 1.80% 1.78% 1.58%
=========================================================================
</Table>
(1) Reclassified to conform to the 2002 presentation.
RETAIL BANKING -- which delivers banking, lending, investment and insurance
services to customers through retail branches, electronic delivery systems and
the network of Primerica independent agents -- reported net income of $2.508
billion in 2001, up $551 million or 28% from 2000. The increase in RETAIL
BANKING reflected growth in both North America and International Retail Banking
of $452 million or 42% and $99 million or 11%, respectively. Growth in North
America was primarily due to the acquisitions of Banamex and European American
Bank (EAB). Growth in International Retail Banking reflected increases in all
regions except Latin America. Net income of $1.957 billion in 2000 grew $298
million or 18% from 1999, primarily reflecting a $256 million or 41% increase in
International Retail Banking, which was driven by growth in Asia of $133 million
or 64%.
In July 2001, Citibanking North America completed the acquisition of EAB, a
state-chartered bank that added $8.4 billion to end-of-period deposits, $4.4
billion to end-of-period loans and 78 branches at December 31, 2001. In August
2001, Citicorp completed its acquisition of Banamex. Subsequently, Citibank
Mexico's banking operations merged into Banamex, with Banamex being the
surviving entity. The business also successfully merged the Citibank branches
onto the Banamex operating platform without customer disruption. Both
acquisitions were accounted for as purchases, therefore, the results of Banamex
and EAB are included in the RETAIL BANKING results from the dates of
acquisition.
As shown in the following table, RETAIL BANKING grew customer deposits and
average loans in 2001. The growth in North America in 2001 primarily reflected
the acquisitions of Banamex and EAB, which added $10.0 billion and $4.0 billion
to average customer deposits and $0.4 billion and $2.3 billion to average loans,
respectively. In addition, North America experienced customer deposit growth in
Citibanking North America and average loan growth in Consumer Assets, primarily
due to increased student loans and mortgage loans held for sale. The growth in
International Retail Banking average loans in 2001 reflected growth in Western
Europe, Japan and Asia, partially offset by a decline in Latin America which
resulted from continued credit risk management initiatives and foreign currency
translation effects. Average customer deposits in the international markets
increased 8% in 2001 as growth in all regions was offset by a decline in Latin
America which reflected continued weak economic conditions in Argentina and
foreign currency translation effects. Growth in average customer deposits in
2000 was driven by increases in Asia, Citibanking North America and Japan.
Growth in average loans in 2000 was mainly due to growth in Consumer Assets,
which experienced increases in variable rate mortgage loans, that are typically
held in the portfolio rather than securitized, and in student loans.
9
<Page>
<Table>
<Caption>
IN BILLIONS OF DOLLARS 2001 2000 1999
- -------------------------------------------------------------------------
CUSTOMER DEPOSITS
North America $ 68.3 $ 50.0 $ 47.7
International 78.7 72.8 68.8
--------------------------------
TOTAL CUSTOMER DEPOSITS $ 147.0 $ 122.8 $ 116.5
AVERAGE LOANS
North America(1) $ 59.8 $ 45.4 $ 38.0
International 37.6 36.4 36.9
--------------------------------
TOTAL AVERAGE LOANS $ 97.4 $ 81.8 $ 74.9
=========================================================================
</Table>
(1) Includes loans held for sale.
Revenues, net of interest expense, of $11.281 billion in 2001 increased
$1.585 billion or 16% from 2000. Revenues in North America grew $1.481 billion
or 27%, driven by the acquisitions of Banamex and EAB and growth in Citibanking
North America and Consumer Assets. Excluding the addition of Banamex and EAB,
growth in Citibanking North America reflected the benefit of strong customer
deposit growth and increased debit card fees along with a realized investment
gain resulting from the disposition of an equity investment. Citibanking North
America revenue growth in 2001 was partially offset by reduced investment
product fees reflecting market conditions throughout the year. Revenue growth in
Consumer Assets was mainly due to higher mortgage securitization income and
spread improvement in student loans, partially offset by lower servicing
revenue. The decline in servicing revenue primarily reflected increased
prepayment activity that was driven by lower interest rates. International
Retail Banking revenues increased $104 million or 2% as growth in Asia and
CEEMEA was partially offset by a decline in Latin America. Growth in Asia was
mainly due to increases in deposits and investment product fees while the
increase in CEEMEA mainly reflected the acquisition of a majority interest in
Bank Handlowy in Poland in June 2000 and the acquisition of ING's retail
branches in Hungary in August 2000. The decline in Latin America was mainly due
to estimated translation losses of $62 million associated with the
re-denomination of certain consumer loans in Argentina. Revenues of $9.696
billion in 2000 grew $483 million or 5% from 1999 reflecting increases in North
America and International Retail Banking. The increase in North America mainly
reflected growth in Citibanking North America, Primerica and Consumer Assets,
partially offset by a decline in Mexico due to the loss of a subsidy from the
Mexican government related to Confia. The increase in International Retail
Banking reflected growth in Asia, Japan and CEEMEA partially offset by a decline
in Western Europe that was mainly driven by the negative impact of foreign
currency translation.
Operating expenses of $6.300 billion in 2001 increased $715 million or 13%
from 2000 as increases in North America were partially offset by declines in
International Retail Banking. The growth in North America was primarily due to
the acquisitions of EAB and Banamex, higher restructuring-related charges,
increased advertising and marketing costs and other volume-related increases.
The declines in International Retail Banking mainly reflected the impact of
foreign currency translation and expense rationalization initiatives across the
regions partially offset by the effects of higher business volumes and
acquisitions. Operating expenses in 2000 were up $242 million or 5% compared to
1999 primarily reflecting the impact of increased business volumes, charges
related to the termination of certain contracts and other e-Consumer related
initiatives in Citibanking North America, Confia systems consolidation costs in
Mexico, and the impact of acquisitions in CEEMEA. Operating expenses included
restructuring-related charges of $128 million ($83 million after-tax) in 2001,
$22 million ($16 million after-tax) in 2000 and $59 million ($38 million
after-tax) in 1999.
The provisions for benefits, claims, and credit losses were $1.061 billion
in 2001, up from $980 million in 2000 and down from $1.188 billion in 1999. The
increase in the provisions for benefits, claims, and credit losses in 2001 was
mainly due to the impact of acquisitions, partially offset by a decline in Asia.
The decrease in the provisions in 2000 compared to 1999 was mainly due to
improvements in the quality of the loan portfolios in Consumer Assets and
Citibanking North America, the impact of the first quarter 2000 auto loan
portfolio sale in Puerto Rico and higher write-offs in Argentina in 1999. Net
credit losses were $636 million and the related loss ratio was 0.65% in 2001,
compared to $618 million and 0.76% in the 2000 and $677 million and 0.90% in
1999. The increase in net credit losses from the prior year was mainly due to
the acquisitions of Banamex and EAB.
Loans delinquent 90 days or more were $3.437 billion or 3.30% of loans at
December 31, 2001, compared to $2.124 billion or 2.37% at December 31, 2000 and
$2.223 billion or 2.82% in 1999. The increase in delinquent loans in 2001 was
mainly due to the acquisitions of Banamex and EAB, as well as increases in
Consumer Assets and Latin America, primarily in Argentina. The increase in
Consumer Assets mainly reflected a higher level of buy backs from GNMA pools
where credit risk is maintained by government agencies. Net credit losses and
the related ratio are expected to increase from 2001 due to the inclusion of a
full year's credit losses for Banamex and EAB as well as future credit
performance of the portfolios, economic conditions and statutory changes in the
regions. This is a forward-looking statement within the meaning of the Private
Securities Litigation Reform Act. See "Forward-Looking Statements" on page 17.
Average assets of $139 billion in 2001 increased $29 billion from 2000,
which, in turn, increased $5 billion from 1999. The increase in 2001 primarily
reflected the acquisitions of Banamex and EAB combined with loan growth in
Consumer Assets.
OTHER CONSUMER
<Table>
<Caption>
IN MILLIONS OF DOLLARS 2001(1) 2000(1) 1999(1)
- -------------------------------------------------------------------------
REVENUES, NET OF INTEREST EXPENSE $ 192 $ 216 $ 544
Operating expenses 423 363 609
Provisions for benefits,
claims, and credit losses (60) 5 (103)
--------------------------------
INCOME BEFORE TAX BENEFITS (171) (152) 38
Income tax benefits (58) (61) 20
--------------------------------
NET LOSS $ (113) $ (91) $ 18
=========================================================================
</Table>
(1) Reclassified to conform to the 2002 presentation.
OTHER CONSUMER - which includes certain treasury and other unallocated staff
functions, global marketing and other programs -- reported losses of $113
million and $91 million in 2001 and 2000, respectively, compared to net income
of $18 million in 1999. The increase in losses from 2000 was primarily due to
lower treasury results and lower foreign currency hedge gains. Income in 1999
was primarily due to gains resulting from the disposition of the Associates
recreational vehicle finance operations (Fleetwood Credit Corporation) and the
sale of certain non-strategic operations.
Operating expenses included a restructuring-related charge of $20 million
($13 million after-tax) in 2001, a restructuring-related credit of $3 million
($2 million after-tax) in 2000 and a restructuring-related charge of $53 million
($34 million after-tax) in 1999.
Revenues, expenses, and the provision for benefits, claims and credit
losses reflect offsets to certain line-item reclassifications reported in other
Global Consumer operating segments. The 1999 revenues,
10
<Page>
expenses, and provision for benefits, claims and credit losses also include the
results of certain private label cards and other businesses that were
discontinued in 1999 and 2000.
GLOBAL CORPORATE AND INVESTMENT BANK
<Table>
<Caption>
IN MILLIONS OF DOLLARS 2001(1) 2000(1) 1999(1)
- -------------------------------------------------------------------------
REVENUES, NET OF INTEREST EXPENSE $ 26,746 $ 26,242 $ 22,060
Operating expenses 17,320 17,299 14,453
Provisions for credit losses 1,464 947 542
--------------------------------
INCOME BEFORE TAXES
AND MINORITY INTEREST 7,962 7,996 7,065
Income taxes 2,823 2,907 2,603
Minority interest, after-tax 26 18 8
--------------------------------
NET INCOME $ 5,113 $ 5,071 $ 4,454
=========================================================================
</Table>
(1) Reclassified to conform to the 2002 presentation.
THE GLOBAL CORPORATE AND INVESTMENT BANK (GCIB) serves corporations,
financial institutions, governments, investors and other participants in capital
markets throughout the world and consists of CAPITAL MARKETS AND BANKING,
PRIVATE CLIENT, and TRANSACTION SERVICES. The primary businesses in CAPITAL
MARKETS AND BANKING include Fixed Income, Equities, Investment Banking, Sales &
Trading (which mainly operates in Asia, Latin America, CEEMEA and Mexico),
CitiCapital and Lending.
On June 7, 2000, GCIB completed the acquisition of a majority interest in
Bank Handlowy, a leading bank in Poland. On May 1, 2000, GCIB completed the
acquisition of the global investment banking business and related net assets of
Schroders PLC (Schroders), including all corporate finance, financial markets
and securities activities. During the second quarter of 2000, GCIB strengthened
its position in the U.S. leasing market through the purchase of Copelco.
GCIB reported net income of $5.113 billion in 2001, up $42 million or 1%
from 2000, which, in turn, was up $617 million or 14% from 1999. The increase in
2001 net income reflects an increase of $320 million or 9% in CAPITAL MARKETS
AND BANKING and $81 million in Other Corporate, partially offset by declines of
$301 million or 28% in PRIVATE CLIENT and $58 million or 12% in TRANSACTION
SERVICES. The increase in 2000 net income reflects an increase of $292 million
in TRANSACTION SERVICES, $233 million or 7% in CAPITAL MARKETS AND BANKING and
$154 million or 17% in PRIVATE CLIENT, partially offset by a decline of $62
million in Other Corporate.
The increase in CAPITAL MARKETS AND BANKING 2001 net income compared to
2000 was primarily due to strong growth in Fixed Income, Sales & Trading and
gains on asset sales in CitiCapital, partially offset by weakness in Equities,
lower earnings from the investment in Nikko Cordial, a higher provision for
credit losses and restructuring-related charges of $121 million (after-tax) in
2001. CAPITAL MARKETS AND BANKING net income of $3.567 billion in 2000 increased
$233 million or 7% compared to 1999 primarily reflecting higher Equities, higher
earnings from the investment in Nikko Cordial and the acquisitions of Schroders
and Bank Handlowy, partially offset by a higher provision for credit losses and
lower Fixed Income.
The decrease in PRIVATE CLIENT 2001 net income compared to 2000 was
primarily due to decreases in customer transaction volumes, revenue from margin
lending and asset-based fees, partially offset by higher revenue from the bank
deposit program. PRIVATE CLIENT net income of $1.068 billion in 2000 increased
$154 million or 17% compared to 1999 primarily reflecting increases in
asset-based fees and higher margin lending revenue.
The decrease in TRANSACTION SERVICES 2001 net income compared to 2000 was
primarily due to increased investment spending on internet initiatives,
declining spreads and a restructuring related charge of $13 million (after-tax)
in 2001, partially offset by higher business volumes, including the acquisitions
of Bank Handlowy and Banamex. TRANSACTION SERVICES net income of $465 million in
2000, increased $292 million from 1999 primarily reflecting higher business
volumes and spreads, including the acquisition of Bank Handlowy.
The improvement in Other Corporate in 2001 was primarily due to gains on
building sales in Asia and release of a rent reserve in 2001 that was no longer
required. The decline in 2000 was primarily due to a release of restructuring
charges in 1999, partially offset by tax benefits in 2000.
The businesses of GCIB are significantly affected by the levels of activity
in the global capital markets which, in turn, are influenced by macro-economic
and political policies and developments, among other factors, in the 100
countries in which the businesses operate. Global economic and market events can
have both positive and negative effects on the revenue performance of the
businesses and can affect credit performance. 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. Net credit losses and cash-basis loans may increase from the 2001 levels
due to weak global economic conditions, sovereign or regulatory actions and
other factors. This paragraph contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act. See "Forward-Looking
Statements" on page 17.
The table below shows net income by region for the Global Corporate and
Investment Bank.
GCIB NET INCOME -- REGIONAL VIEW
<Table>
<Caption>
IN MILLIONS OF DOLLARS 2001(1) 2000(1) 1999(1)
- -------------------------------------------------------------------------
North America (excluding Mexico) $ 2,746 $ 2,464 $ 2,667
Mexico 101 96 57
Western Europe 509 697 443
Japan 97 348 130
Asia (excluding Japan) 617 547 427
Latin America 542 524 489
Central & Eastern Europe,
Middle East & Africa 501 395 241
--------------------------------
TOTAL NET INCOME $ 5,113 $ 5,071 $ 4,454
=========================================================================
</Table>
(1) Reclassified to conform to the 2002 presentation.
CAPITAL MARKETS AND BANKING
<Table>
<Caption>
IN MILLIONS OF DOLLARS 2001(1) 2000(1) 1999(1)
- -------------------------------------------------------------------------
REVENUES, NET OF INTEREST EXPENSE $ 17,492 $ 16,192 $ 13,457
Operating expenses 9,941 9,528 7,656
Provision for credit losses 1,439 920 468
--------------------------------
INCOME BEFORE TAXES
AND MINORITY INTEREST 6,112 5,744 5,333
Income taxes 2,206 2,152 1,990
Minority interest, after-tax 19 25 9
--------------------------------
NET INCOME $ 3,887 $ 3,567 $ 3,334
=========================================================================
</Table>
(1) Reclassified to conform to the 2002 presentation.
CAPITAL MARKETS AND BANKING delivers a full range of global financial
services and products including investment banking, institutional brokerage,
research and advisory services, foreign exchange, structured products,
derivatives, loans, leasing and equipment finance.
CAPITAL MARKETS AND BANKING net income was $3.887 billion in 2001 compared
to $3.567 billion in 2000 and $3.334 billion in 1999.
11
<Page>
Net income increased $320 million or 9% during 2001 primarily due to strong
growth in Fixed Income, Sales & Trading and gains on asset sales in CitiCapital,
partially offset by weakness in Equities, lower earnings from the investment in
Nikko Cordial, a higher provision for credit losses and restructuring-related
charges of $121 million (after-tax) in 2001. Net income of $3.567 billion in
2000 increased $233 million or 7% compared to 1999 primarily reflecting higher
Equities, higher earnings from the investment in Nikko Cordial and the
acquisitions of Schroders and Bank Handlowy, partially offset by a higher
provision for credit losses and lower Fixed Income.
Revenues, net of interest expense, of $17.492 billion in 2001 increased
$1.300 billion or 8% from 2000 primarily due to strong growth in Fixed Income,
higher Sales & Trading, gains on asset sales in CitiCapital, the acquisition of
Banamex and benefits from capital hedging activities, partially offset by
weakness in Equities and lower earnings from the investment in Nikko Cordial.
Revenues, net of interest expense, of $16.192 billion in 2000 increased $2.735
billion or 20% from 1999 primarily due to strong growth in Equities and
Investment Banking, higher earnings from the investment in Nikko Cordial and the
impact of acquisitions of Schroders and Bank Handlowy, partially offset by
reductions in Fixed Income.
Operating expenses were $9.941 billion in 2001 compared to $9.528 billion
in 2000 and $7.656 billion in 1999. Operating expenses increased $413 million or
4% in 2001 compared to 2000 primarily due to increases in Fixed Income and Sales
& Trading and the acquisition of Banamex, partially offset by lower compensation
and benefits and expense control initiatives. Compensation and benefits
decreased primarily as a result of declines in production-related compensation
and savings from restructuring actions initiated in 2001. Operating expenses
increased $1.872 billion or 24% in 2000 compared to 1999 primarily due to higher
production-related compensation and benefits expense, including the acquisitions
of Schroders and Bank Handlowy.
The provision for credit losses was $1.439 billion in 2001 compared to $920
million in 2000 and $468 million in 1999. The increase in 2001 was primarily due
to increases in the transportation leasing portfolio, higher net credit losses
in the telecommunications, energy, retail and airline industries as well as
write-downs in Argentina. The increase in 2000 compared to 1999 primarily
reflected increases in the transportation leasing portfolio, higher net credit
losses in the health care industry, recoveries on real estate loans in 1999 and
the inclusion of losses for Copelco, partially offset by improvements in Asia,
mainly China, Indonesia, Australia and Thailand, and in CEEMEA.
Cash-basis loans were $3.048 billion, $1.901 billion and $1.481 billion at
December 31, 2001, 2000 and 1999, respectively. The increase in 2001 primarily
reflects increases in the telecommunications, energy, utility and retail
industries, combined with increases in CitiCapital, Mexico, Latin America,
mainly Argentina, and Asia, mainly Australia and New Zealand. CitiCapital
increased primarily due to increases in the transportation portfolio. The
increase in Mexico primarily reflects the acquisition of Banamex which included
exposures in steel, textile, food products and other industries. The increase in
2000 primarily reflects increases in the telecommunications, energy, utility and
retail industries, the acquisition of Bank Handlowy as well as increases in
CitiCapital, partially offset by improvements in Asia.
The OREO portfolio totaled $147 million, $188 million and $231 million at
December 31, 2001, 2000 and 1999, respectively. The improvements in OREO in 2001
and 2000 were primarily related to the North America real estate portfolio.
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. Net credit losses and cash-basis loans
may increase from 2001 levels due to weak economic conditions in the U.S., Japan
and Europe, the economic crisis in Argentina, sovereign or regulatory actions
and other factors. This statement is a forward-looking statement within the
meaning of the Private Securities Litigation Reform Act. See "Forward-Looking
Statements" on page 17.
PRIVATE CLIENT
<Table>
<Caption>
IN MILLIONS OF DOLLARS 2001(1) 2000(1) 1999(1)
- -------------------------------------------------------------------------
REVENUES, NET OF INTEREST EXPENSE $ 5,940 $ 6,900 $ 5,923
Operating expenses 4,710 5,191 4,460
Provision for credit losses 4 - -
--------------------------------
INCOME BEFORE TAXES 1,226 1,709 1,463
Income taxes 459 641 549
--------------------------------
NET INCOME $ 767 $ 1,068 $ 914
=========================================================================
</Table>
(1) Reclassified to conform to the 2002 presentation.
PRIVATE CLIENT provides investment advice and financial planning and
brokerage services, primarily through the network of Smith Barney Financial
Consultants.
PRIVATE CLIENT net income was $767 million in 2001 compared to $1.068
billion in 2000 and $914 million in 1999. PRIVATE Client net income decreased
$301 million or 28% during 2001 primarily due to decreases in customer
transaction volumes, revenue from margin lending and asset-based fees, partially
offset by higher revenue from the bank deposit program. Net income of $1.068
billion in 2000 increased $154 million or 17% compared to 1999 primarily
reflecting increases in asset-based fees and higher margin lending revenue.
Revenues, net of interest expense, decreased $960 million or 14% in 2001 to
$5.940 billion, primarily due to declines in equity markets resulting in lower
customer transaction volumes, decreases in revenue from margin lending and lower
asset-based fees, partially offset by higher revenue from the bank deposit
program. Revenues, net of interest expense, increased $977 million or 16% to
$6.900 billion in 2000 from 1999 primarily due to increases in asset-based fees
and higher margin lending revenue.
The following table details trends in total assets under fee-based
management, total client assets and annualized revenue per financial consultant:
<Table>
<Caption>
IN BILLIONS OF DOLLARS 2001 2000 1999
- -------------------------------------------------------------------------
Consulting Group and
Internally Managed Accounts $ 150.2 $ 145.6 $ 126.2
Financial Consultant Managed
Accounts 54.9 56.2 43.6
--------------------------------
TOTAL ASSETS UNDER
FEE-BASED MANAGEMENT $ 205.1 $ 201.8 $ 169.8
--------------------------------
Total Client Assets $ 977 $ 977 $ 965
Annualized Revenue per FC
(IN THOUSANDS OF DOLLARS) $ 466 $ 583 $ 534
=========================================================================
</Table>
(1) Includes assets managed jointly with Global Investment Management.
Operating expenses were $4.710 billion in 2001 compared to $5.191 billion
in 2000 and $4.460 billion in 1999. Operating expenses decreased $481 million or
9% compared to 2000 primarily due to lower compensation and benefits reflecting
decreases in production-related compensation, and the impact of expense control
initiatives. Operating expenses of $5.191 billion in 2000, increased $731
million or 16% from 1999 primarily due to higher production related compensation
and benefits expense.
12
<Page>
TRANSACTION SERVICES
<Table>
<Caption>
IN MILLIONS OF DOLLARS 2001(1) 2000(1) 1999(1)
- -------------------------------------------------------------------------
REVENUES, NET OF INTEREST EXPENSE $ 3,516 $ 3,427 $ 2,890
Operating expenses 2,845 2,680 2,531
Provisions for credit losses 21 27 74
--------------------------------
INCOME BEFORE TAXES
AND MINORITY INTEREST 650 720 285
Income taxes 236 262 113
Minority interest, after-tax 7 (7) (1)
--------------------------------
NET INCOME $ 407 $ 465 $ 173
=========================================================================
</Table>
(1) Reclassified to conform to the 2002 presentation.
TRANSACTION SERVICES - which provides cash management, trade finance,
custody, clearing and depository services globally - reported net income of $407
million in 2001, down $58 million or 12% from 2000 primarily due to increased
investment spending on internet initiatives, declining spreads and a
restructuring-related charge of $13 million (after-tax), partially offset by
higher business volumes, including the acquisitions of Bank Handlowy and
Banamex. Net income of $465 million in 2000, increased $292 million from 1999
primarily reflecting higher business volumes and spreads, including the
acquisition of Bank Handlowy.
As shown in the following table, average liability balances and assets
under custody experienced growth in 2001 and 2000. Average liability balances of
$77 billion, $64 billion and $56 billion in 2001, 2000 and 1999, respectively,
primarily reflect growth in North America and Western Europe and the acquisition
of Banamex. Assets under custody increased 17% to $4.8 trillion in 2001 and 8%
to $4.1 trillion in 2000 primarily reflecting increases in North America and
Europe and the acquisition of Bank Handlowy.
<Table>
<Caption>
IN BILLIONS OF DOLLARS 2001(1) 2000(1) 1999(1)
- -------------------------------------------------------------------------
Liability balances (AVERAGE IN
BILLIONS) $ 77 $ 64 $ 56
Assets under custody (EOP IN
TRILLIONS) $ 4.8 $ 4.1 $ 3.8
=========================================================================
</Table>
(1) Reclassified to conform to the 2002 presentation.
Revenues, net of interest expense, were $3.516 billion in 2001, up $89
million or 3% primarily reflecting higher business volumes, including the
benefit of the acquisitions of Bank Handlowy and Banamex, partially offset by
lower spreads. Revenues, net of interest expense, of $3.427 billion in 2000
increased $537 million or 19% compared to 1999 primarily due to higher business
volumes and spreads, including the acquisition of Bank Handlowy.
Operating expenses increased $165 million or 6% in 2001 to $2.845 billion
from $2.680 billion in 2000 which, in turn, increased $149 million or 6% from
$2.531 billion in 1999 primarily due to internet-related investment spending and
the acquisitions of Bank Handlowy and Banamex. Expense growth in 2001 also
includes the impact of the Banamex acquisition.
The provision for credit losses of $21 million in 2001, $27 million in 2000
and $74 million in 1999, decreased primarily reflecting improvements in CEEMEA.
The decrease in 2000 also includes improvements in Asia.
Cash-basis loans, which in the TRANSACTION SERVICES business are primarily
trade finance receivables, were $464 million, $23 million and $44 million at
December 31, 2001, 2000 and 1999, respectively. The increase in 2001 primarily
reflects increases in Mexico due to the acquisition of Banamex. The decrease in
2000 was primarily due to improvements in Asia.
OTHER CORPORATE
<Table>
<Caption>
IN MILLIONS OF DOLLARS 2001(1) 2000(1) 1999(1)
- -------------------------------------------------------------------------
REVENUES, NET OF INTEREST EXPENSE $ (202) $ (277) $ (210)
Operating expenses (176) (100) (194)
--------------------------------
LOSS BEFORE TAXES (26) (177) (16)
Income tax benefits (78) (148) (49)
--------------------------------
NET INCOME (LOSS) $ 52 $ (29) $ 33
=========================================================================
</Table>
(1) Reclassified to conform to the 2002 presentation.
OTHER CORPORATE - which includes intra-GCIB segment eliminations, certain
one-time non-recurring items and tax amounts not allocated to GCIB products -
reported net income of $52 million in 2001 compared to a net loss of $29 million
in 2000 and net income of $33 million in 1999. The improvement in Other
Corporate in 2001 was primarily due to gains on building sales in Asia and
release of a rent reserve in 2001 that was no longer required. The decline in
2000 was primarily due to a release of restructuring charges in 1999, partially
offset by tax benefits in 2000.
GLOBAL INVESTMENT MANAGEMENT
<Table>
<Caption>
IN MILLIONS OF DOLLARS 2001(1) 2000(1) 1999(1)
- -------------------------------------------------------------------------
REVENUES, NET OF INTEREST EXPENSE $ 8,006 $ 7,330 $ 6,179
Operating expenses 2,770 2,645 2,182
Provisions for benefits,
claims, and credit losses 2,768 2,411 2,045
--------------------------------
INCOME BEFORE TAXES
AND MINORITY INTEREST 2,468 2,274 1,952
Income taxes 844 810 709
Minority interest, after-tax 28 4 -
--------------------------------
INCOME $ 1,596 $ 1,460 $ 1,243
=========================================================================
</Table>
(1) Reclassified to conform to the 2002 presentation.
GLOBAL INVESTMENT MANAGEMENT comprises LIFE INSURANCE AND ANNUITIES,
PRIVATE BANK and ASSET MANAGEMENT. These businesses offer a broad range of life
insurance, annuity, asset management and personalized wealth management products
and services distributed to institutional, high net worth and retail clients.
Global Investment Management net income in 2001 increased to $1.596
billion, up $136 million or 9% from 2000. The 2001 increase in net income
primarily reflected the Banamex acquisition in both the LIFE INSURANCE AND
ANNUITIES and ASSET MANAGEMENT businesses, increased client activity across most
products within PRIVATE BANK and higher business volumes and premiums within
TLA. Net income of $1.460 billion in 2000 was up $217 million or 17% from 1999.
The 2000 increase in net income reflected increased business volumes, a strong
capital base and strong investment income at TLA, continued client revenue
momentum within PRIVATE BANK along with the impact of the acquisitions of
Siembra, Colfondos and Confia in ASSET MANAGEMENT. Income of $1.596 billion in
2001, $1.460 billion in 2000 and $1.243 billion in 1999 included restructuring
charges of $16 million ($27 million pretax) and $11 million ($18 million pretax)
in
13
<Page>
2001 and 2000, respectively, and a restructuring credit of $2 million ($4
million pretax) in 1999.
The table below shows net income by region for Global Investment
Management.
GLOBAL INVESTMENT MANAGEMENT NET INCOME -- REGIONAL VIEW
<Table>
<Caption>
IN MILLIONS OF DOLLARS 2001(1) 2000(1) 1999(1)
- -------------------------------------------------------------------------
North America (excluding Mexico) $ 1,313 $ 1,255 $ 1,075
Mexico 73 27 13
Western Europe 4 (21) 6
Japan 33 17 23
Asia (excluding Japan) 79 53 33
Latin America 63 94 70
Central & Eastern Europe,
Middle East & Africa 31 35 23
--------------------------------
TOTAL NET INCOME $ 1,596 $ 1,460 $ 1,243
=========================================================================
</Table>
(1) Reclassified to conform to the 2002 presentation.
LIFE INSURANCE AND ANNUITIES
<Table>
<Caption>
IN MILLIONS OF DOLLARS 2001(1) 2000(1) 1999(1)
- -------------------------------------------------------------------------
REVENUES, NET OF INTEREST EXPENSE $ 4,379 $ 4,018 $ 3,464
Provision for benefits and claims 2,745 2,388 2,033
Operating expenses 394 447 468
--------------------------------
INCOME BEFORE TAXES
AND MINORITY INTEREST 1,240 1,183 963
Income taxes 394 389 328
MINORITY INTEREST, NET OF TAX 10 - -
--------------------------------
NET INCOME(2) $ 836 $ 794 $ 635
=========================================================================
</Table>
(1) Reclassified to conform to the 2002 presentation.
(2) Excludes investment gains/losses included in Proprietary Investment
Activities segment.
LIFE INSURANCE AND ANNUITIES comprises TLA and International Insurance
Manufacturing. These businesses offer individual annuity, group annuity, and
individual life insurance products and corporate-owned life insurance (COLI)
products primarily marketed by The Travelers Insurance Company (TIC) and its
wholly-owned subsidiary The Travelers Life and Annuity Company (TLAC) under the
Travelers Life and Annuity name. Among the range of individual products offered
are fixed and variable deferred annuities, payout annuities and term, universal
and variable life insurance. These products are primarily distributed through
CitiStreet Retirement Services (CitiStreet) (formerly The Copeland Companies
(Copeland)), a joint venture, Salomon Smith Barney Financial Consultants,
Primerica, Citibank, and a nationwide network of independent agents and the
growing outside broker dealer channel. The COLI product is a variable universal
life product distributed through independent specialty brokers. The group
products include institutional pensions, including guaranteed investment
contracts (GICs), payout annuities, group annuities to employer-sponsored
retirement and savings plans and structured finance transactions. The
International Insurance Manufacturing business primarily has operations in
Western Europe, Latin America, Mexico and Asia.
LIFE INSURANCE AND ANNUITIES net income was $836 million in 2001 compared
to $794 million in 2000 and $635 million in 1999, increasing $42 million or 5%
and $159 million or 25% from 2000 and 1999, respectively. The $42 million
increase in net income from 2000 primarily resulted from a $41 million increase
in TLA, a $13 million increase in Mexico due to the Banamex acquisition and an
$8 million increase in Western Europe, partially offset by a decline in Latin
America of $21 million. The $21 million decline in Latin America primarily
reflected a charge for Argentine debt securities exchanged for loans held in the
Siembra insurance companies, which were held in support of existing
contractholders' liabilities. The $159 million increase in net income from 1999
primarily resulted from a $153 million increase in TLA and a $6 million increase
in Latin America.
TRAVELERS LIFE AND ANNUITY
The $41 million or 5% improvement in net income in 2001 compared to 2000
reflects operating expense reductions and a 3% net investment income growth,
despite the declining markets. During 2001, TLA also achieved double-digit
growth in individual life direct periodic premiums, group annuity net written
premiums and deposits and account balances versus the prior year. The $153
million or 25% improvement in net income in 2000 reflects increased business
volume, a strong capital base and particularly strong investment income versus
the prior-year period. During 2000, this business continued strong individual
annuity sales and achieved double-digit business volume growth in group annuity
account balances and individual life net written premiums, reflecting growth in
retirement savings and estate planning products and strong momentum from
cross-selling initiatives. The continued growth in 2001 and 2000 reflects both
greater popularity of these products with an aging American population and
strong momentum from cross-selling initiatives. Total operating expenses
decreased in 2001 compared to the prior-year period due to continued expense
management and the absence of expenses related to the long-term care insurance
business which was sold during the third quarter of 2000. The long-term care
transaction also reduced the amount of premium revenue reported in 2001. Total
operating expenses decreased in 2000 compared to the prior-year period due to
the contribution of Copeland to the CitiStreet joint venture and the absence of
certain one-time technology expenses in 1999. The increase in revenues was also
mitigated by the contribution of Copeland.
The cross-selling initiatives of TLA products through Primerica, Citibank,
Salomon Smith Barney Financial Consultants, and CitiStreet, as well as strong
sales through various intermediaries, a nationwide network of independent agents
and outside broker dealers, reflect the ongoing effort to build market share by
strengthening relationships in key distribution channels.
On July 31, 2000, TIC sold 90% of its individual long-term care insurance
business to General Electric Capital Assurance Company in the form of an
indemnity reinsurance arrangement. Proceeds from the sale were $410 million,
resulting in a deferred gain of approximately $150 million after-tax.
The following table shows net written premiums and deposits by product
line, excluding long-term care insurance written premiums for the three years
ended December 31:
<Table>
<Caption>
IN MILLIONS OF DOLLARS 2001 2000 1999
- -------------------------------------------------------------------------
INDIVIDUAL ANNUITIES
Fixed $ 2,120 $ 1,267 $ 1,008
Variable 4,000 5,025 4,265
Individual payout 59 80 78
GICS AND OTHER GROUP ANNUITIES 7,068 5,528 5,619
INDIVIDUAL LIFE INSURANCE
Direct periodic premiums and
deposits 652 511 409
Single premium deposits 208 98 84
Reinsurance (96) (83) (71)
--------------------------------
Total $ 14,011 $ 12,426 $ 11,392
=========================================================================
</Table>
14
<Page>
The majority of the annuity business and a substantial portion of the life
business written by TLA are accounted for as investment contracts, with the
result that the premiums are considered deposits and are not included in
revenues.
Individual annuity account balances and benefit reserves reached $30.0
billion at December 31, 2001, up from $29.4 billion at year-end 2000 and $27.9
billion at year-end 1999. Net written premiums and deposits decreased in 2001 to
$6.179 billion from $6.372 billion in 2000 (down 3%). The decrease in individual
annuity net written premiums and deposits was driven by a decline in variable
annuity sales due to current market conditions, but was partially offset by
significant fixed annuity sales increases over the prior-year period.
Non-affiliated sales channels increased 32% allowing this business to increase
market share despite lower sales. Net written premiums and deposits increased in
2000 to $6.372 billion from $5.351 billion in 1999 (up 19%). Both 2001 and 2000
continue to reflect the cross-selling initiatives at all of the Citigroup
affiliates, and also reflect the continued penetration of outside broker-dealer
channels.
Group annuity account balances and benefit reserves reached $21.0 billion
at December 31, 2001, up from $17.5 billion at year-end 2000 (up 20%), and $15.1
billion at year-end 1999. During both 2001 and 2000, the group annuity business
experienced continued strong sales momentum in all products, particularly
long-term liability and guaranteed investment contracts. Net written premiums
and deposits (excluding the Company's employee pension plan deposits) in 2001
were $7.068 billion, compared to $5.528 billion in 2000 reflecting fixed GIC
growth through structured finance transactions and long-term liability growth
through the extension of structured settlement broker relationships and large
case employer pension sales. Net written premiums and deposits were $5.619
billion in 1999 and reflected particularly strong structured finance
transactions.
Direct periodic premiums and deposits for individual life insurance were
$652 million in 2001 compared to $511 million in 2000 (up 28%), driven by
independent agent high end estate planning and COLI sales, and $409 million in
1999. Life insurance in force was $75.0 billion at December 31, 2001, up from
$66.9 billion at year-end 2000 and $60.6 billion at year-end 1999.
PRIVATE BANK
<Table>
<Caption>
IN MILLIONS OF DOLLARS 2001(1) 2000(1) 1999(1)
- -------------------------------------------------------------------------
REVENUES, NET OF INTEREST EXPENSE $ 1,542 $ 1,417 $ 1,212
Operating expenses 946 892 768
Provision for credit losses 23 23 12
--------------------------------
INCOME BEFORE TAXES 573 502 432
Income taxes 205 185 162
--------------------------------
NET INCOME 368 317 270
================================
Average assets (IN BILLIONS OF
DOLLARS) $ 26 $ 25 $ 20
Return on assets 1.42% 1.27% 1.35%
=========================================================================
Client business volumes under
management (IN BILLIONS OF
DOLLARS) $ 159 $ 153 $ 140
=========================================================================
</Table>
(1) Reclassified to conform to the 2002 presentation.
PRIVATE BANK provides personalized wealth management services for high net worth
clients around the world. PRIVATE BANK net income was $368 million in 2001, up
$51 million or 16% from 2000 primarily reflecting increased client activity
across most products, partially offset by increased investment spending in
technology and front-end sales and servicing capabilities. Net income of $317
million in 2000 was up $47 million or 17% from 1999 primarily reflecting
continued client revenue momentum, partially offset by increased front-end
expenses and a moderate increase in the provision for credit losses.
Client business volumes under management which include custody accounts,
client assets under fee-based management and deposits and loans, were $159
billion at the end of the year, up 4% from $153 billion in 2000 reflecting
strong growth in Asia and continued growth in the U.S., despite challenging
market conditions.
Revenues, net of interest expense, were $1.542 billion in 2001, up $125
million or 9% from 2000, primarily driven by the impact of lower interest rates
and higher investment product (fees and trading) revenues. The 2001 increase
also reflects strong international growth in Japan and Asia, up 22% and 20%,
respectively, from the prior-year period and continued growth in the North
American region, up 12% from the prior-year period. Revenues in 2000 were $1.417
billion, up $205 million or 17% from 1999 reflecting increases in fee and
interest-related products. The 2000 increase also reflects strong international
growth in Japan, Asia and CEEMEA, up 40%, 23%, and 19%, respectively, from the
prior-year period and growth in the North American region, up 15% from the
prior-year period.
Operating expenses of $946 million in 2001 were up $54 million or 6% from
2000 primarily reflecting continued investment spending in technology and
front-end sales and servicing capabilities. Expenses were $892 million in 2000,
up $124 million or 16% from 1999 primarily reflecting higher levels of bankers
and product specialists hired to improve front-end sales and servicing
capabilities. Operating expenses include restructuring charges of $7 million ($4
million after-tax) and $8 million ($5 million after-tax) in 2001 and 2000,
respectively, and include a restructuring credit of $2 million ($1 million
after-tax) in 1999.
The provision for credit losses was $23 million in both 2001 and 2000,
compared to $12 million in 1999. The increase in the provision for credit losses
in 2000 of $11 million primarily related to a loan in Europe. Net credit losses
in 2001 remained at a nominal level of 0.06% of average loans outstanding,
compared with 0.09% in 2000. Loans 90 days or more past due at year-end 2001
were $135 million or 0.54% of total loans outstanding, compared with 0.23% at
the end of 2000 and 0.54% at the end of 1999.
Average assets of $26 billion in 2001 increased $1 billion or 4% from $25
billion in 2000, which, in turn, increased $5 billion or 25% from 1999. The
increase in 2000 was primarily related to incremental margin lending and
mortgage financing.
ASSET MANAGEMENT
<Table>
<Caption>
IN MILLIONS OF DOLLARS 2001(1) 2000(1) 1999(1)
- -------------------------------------------------------------------------
REVENUES, NET OF INTEREST EXPENSE $ 2,085 $ 1,895 $ 1,503
Operating expenses 1,430 1,306 946
--------------------------------
INCOME BEFORE TAXES
AND MINORITY INTEREST 655 589 557
Income taxes 245 236 219
Minority interest, after-tax 18 4 -
--------------------------------
NET INCOME $ 392 $ 349 $ 338
=========================================================================
Assets under management
(IN BILLIONS OF DOLLARS)(2) $ 440 $ 410 $ 377
=========================================================================
</Table>
(1) Reclassified to conform to the 2002 presentation.
(2) Includes $31 billion, $30 billion, and $31 billion in 2001, 2000 and 1999,
respectively, for PRIVATE BANK clients.
ASSET MANAGEMENT includes the businesses of Citigroup Asset Management
(CAM), Citigroup Alternative Investments (CAI), Banamex asset management and
retirement services businesses and Citigroup's other retirement services
businesses in North America and Latin America. These businesses offer
institutional, high net worth and retail clients a broad range of investment
alternatives from investment
15
<Page>
centers located around the world. Products and services offered include mutual
funds, closed-end funds, separately managed accounts, unit investment trusts,
alternative investments, variable annuities (through affiliated and third party
insurance companies), and pension administration services.
Net income of $392 million in 2001 was up $43 million or 12% compared to
2000 primarily reflecting the Banamex acquisition and an increase in CAI. Net
income of $349 million in 2000 was up $11 million or 3% compared to 1999
reflecting an increase in retirement services due to Latin America acquisitions
and an increase in CAM North America due to growth in asset-based fee revenue,
partially offset by expense increases in the U.S. and international regions of
CAM.
Assets under management rose to $440 billion as of December 31, 2001, up
$30 billion or 7% from $410 billion in 2000, reflecting $14 billion due to the
Banamex acquisition and strong net flows, partially offset by negative market
activity and the transfer of $26 billion in retail Money Market assets to the
SSB Bank Deposit Program. Institutional client assets of $143 billion as of
December 31, 2001 were up $28 billion or 24% compared to a year ago reflecting
the Banamex acquisition and an increase in institutional money market fund and
long-term product flows, partially offset by negative market action. Retail and
Private Bank client assets were $237 billion, down $7 billion or 3% from $244
billion in 2000, reflecting negative market action and the impact of transfers
of Money Market assets to the SSB Bank Deposit Program. Retail client assets,
excluding money markets and unit investment trusts, grew 9%, driven by strong
net flows, partially offset by negative market action. CAI client assets were
$48 billion as of December 31, 2001, up $3 billion or 7% from $45 billion in
2000. Retirement Services assets were $12 billion as of December 31, 2001, up $6
billion from $6 billion in 2000, primarily reflecting the Banamex acquisition.
Sales of proprietary mutual funds and managed account products at Salomon
Smith Barney Inc. (SSB) rose 33% to $28 billion in 2001 from the prior year
primarily driven by growth in managed account products, and represented 59% of
SSB's retail channel sales for the year. Sales of mutual and money funds through
Global Consumer's banking network were $11 billion for the year, representing
53% of total sales, including $8 billion in International and $3 billion in the
U.S., of which Primerica sold $2.0 billion of proprietary U.S. mutual and money
funds in 2001, a 9% increase compared to 2000, representing 67% of Primerica's
total sales. Institutional long-term product sales of $28 billion increased 40%
over the prior year and include $14 billion of sales to GCIB clients.
Revenues, net of interest expense, increased $190 million or 10% to $2.085
billion in 2001. This was compared to $1.895 billion in 2000, which was up $392
million or 26% from 1999. The increase in 2001 was primarily due to the Banamex
and other acquisitions, and the effects of positive net flows, partially offset
by the impact of lower market values of assets under management and the transfer
of assets to the SSB Bank Deposit Program. The increase in 2000 was primarily
due to the impact of acquisitions in Mexico retirement services and the
acquisitions of Siembra, Colfondos and Confia in the Latin America retirement
services businesses, along with continued growth in asset-based fees, partially
offset by declines in the international regions of CAM.
Operating expenses of $1.430 billion in 2001 increased $124 million or 9%
from 2000. The increase in 2001 primarily resulted from the Banamex and
retirement services acquisitions, and increases in other variable expenses
related to revenue growth. Operating expenses of $1.306 billion in 2000
increased $360 million or 38% from 1999. The increase in 2000 primarily resulted
from the impact of acquisitions in the retirement services businesses, as well
as continued investment in sales and marketing activities, technology and
product development. Operating expenses include restructuring charges of $20
million ($12 million after-tax) and $10 million ($6 million after-tax) in 2001
and 2000, respectively, and include a restructuring credit of $2 million ($1
million after-tax) in 1999.
PROPRIETARY INVESTMENT ACTIVITIES
<Table>
<Caption>
IN MILLIONS OF DOLLARS 2001(1) 2000(1) 1999(1)
- -------------------------------------------------------------------------
REVENUES, NET OF INTEREST EXPENSE $ 584 $ 2,263 $ 971
Operating expenses 118 127 75
Provision for credit losses - 7 -
--------------------------------
INCOME BEFORE TAXES
AND MINORITY INTEREST 466 2,129 896
Income taxes 153 791 313
Minority interest, after-tax (5) (2) -
--------------------------------
INCOME $ 318 $ 1,340 $ 583
=========================================================================
</Table>
(1) Reclassified to conform to the 2002 presentation.
PROPRIETARY INVESTMENT ACTIVITIES comprises Citigroup's venture capital
activities, realized investment gains (losses) from certain insurance-related
investments, results from certain proprietary investments, the results of
certain investments in countries that refinanced debt under the 1989 Brady Plan
or plans of a similar nature, and since August 2001, the Banamex investment
portfolio.
Revenues, net of interest expense, include $441 million, $2.373 billion and
$882 million from proprietary investments and $143 million, ($110) million and
$89 million from net realized gains from insurance-related investments for the
years ended 2001, 2000 and 1999, respectively.
Revenues, net of interest expense, in 2001 of $584 million decreased $1.679
billion from 2000 primarily reflecting lower venture capital results and current
year impairment write-downs in insurance-related and other proprietary
investments, partially offset by increased gains in insurance-related and other
proprietary investments. Revenues, net of interest expense, in 2000 of $2.263
billion increased $1.292 billion from 1999 primarily reflecting increases in
venture capital results and gains on the exchange of certain Latin American
bonds. The 2000 first quarter included losses in insurance-related investments
from repositioning activities designed to improve yields and maturity profiles,
and write-downs in the refinancing portfolio.
Proprietary Investment Activities results may fluctuate in the future as a
result of market and asset-specific factors. This statement is a forward-looking
statement within the meaning of the Private Securities Litigation Reform Act.
See "Forward-Looking Statements" on page 17.
16
<Page>
CORPORATE/OTHER
<Table>
<Caption>
IN MILLIONS OF DOLLARS 2001(1) 2000(1) 1999(1)
- -------------------------------------------------------------------------
REVENUES, NET OF INTEREST EXPENSE $ (334) $ (582) $ 122
Operating expenses 762 1,001 835
Provisions for benefits,
claims, and credit losses (8) 38 206
--------------------------------
LOSS FROM CONTINUING OPERATIONS
BEFORE TAXES, MINORITY INTEREST,
AND CUMULATIVE EFFECT OF ACCOUNTING
CHANGES (1,088) (1,621) (919)
Income tax benefits (465) (571) (307)
Minority interest, after-tax 11 - -
--------------------------------
LOSS FROM CONTINUING OPERATIONS (634) (1,050) (612)
INCOME FROM DISCONTINUED OPERATIONS 1,055 1,288 1,177
CUMULATIVE EFFECT OF ACCOUNTING
CHANGES (158) - (127)
--------------------------------
NET INCOME $ 263 $ 238 $ 438
=========================================================================
</Table>
(1) Reclassified to conform to the 2002 presentation.
CORPORATE/OTHER includes net corporate treasury results, corporate staff
and other corporate expenses, certain intersegment eliminations; the remainder
of Internet-related development activities, cumulative effect of accounting
changes and taxes not allocated to the individual businesses, the results of
discontinued operations of TPC, and in 1999 and 2000, activities related to the
Associates Housing Finance (AHF) unit. In January 2000, Associates announced its
intention to discontinue the loan origination operations of its AHF unit. Prior
to the announcement, AHF originated and serviced loans for manufactured homes.
Revenues, net of interest expense, of ($334) million in 2001 increased $248
million from 2000, primarily due to lower net treasury costs primarily related
to reduced rates, and the impact of higher intersegment eliminations, partially
offset by increased funding costs related to the Associates and Banamex
acquisitions. Revenues, net of interest expense of ($582) million in 2000
decreased $704 million from 1999 primarily reflecting the discontinuation of AHF
activity and higher net treasury costs.
Operating expenses of $762 million in 2001 decreased $239 million from
2000 primarily reflecting restructuring-related items and merger related charges
of $346 million, including exit costs, incurred in 2000 as a result of
Citigroup's acquisition of Associates, and a 2000 $108 million pretax expense
for the contribution of appreciated venture capital securities to Citigroup's
Foundation, partially offset by higher intersegment eliminations and a $57
million 2001 fourth quarter pretax expense for the contribution of appreciated
venture capital securities to Citigroup's Foundation, which had minimal impact
on Citigroup's earnings after related tax benefits and investment gains.
Operating expenses of $1.001 billion in 2000 increased $166 million from 1999
primarily reflecting restructuring-related items and merger related charges
related to the Associates acquisition in 2000, partially offset by the
discontinuation of AHF activity and decreases in certain unallocated corporate
costs, intersegment eliminations, performance-based option expense and
technology costs. The provisions for benefits, claims and credit losses in 1999
primarily related to AHF.
Discontinued operations represents the results of the Travelers Property
and Casualty business. Income from discontinued operations in 2001 of $1.055
billion decreased $233 million from the prior year primarily reflecting the
impact of catastrophe losses associated with the events of September 11th.
The 2001 cumulative effect of accounting changes of $158 million includes a
2001 first quarter charge of $42 million related to the adoption of SFAS No. 133
and a 2001 second quarter charge of $116 million reflecting the impact of
adopting EITF 99-20. The 1999 cumulative effect of accounting changes of $127
million includes the 1999 first quarter charges of $135 million and $15 million
related to the adoptions of SOP 97-3 and SOP 98-5, respectively, offset by a
first quarter credit to earnings of $23 million due to the adoption of SOP 98-7.
FORWARD-LOOKING STATEMENTS
Certain of the statements contained herein that are not historical facts are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act. The Company's actual results may differ materially from
those included in the forward-looking statements. Forward-looking statements are
typically identified by words or phrases 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 risks and uncertainties
including, but not limited to, weakening global economic conditions, the
economic crisis in Argentina, higher unemployment rates and the continued
increase in bankruptcy filings in the U.S. and Japan, sovereign or regulatory
actions, and political conditions and developments; portfolio growth and
seasonal factors; the resolution of legal proceedings and related matters; and
the Company's success in managing the costs associated with the expansion of
existing distribution channels and developing new ones, and in realizing
increased revenues from such distribution channels, including cross-selling
initiatives and electronic commerce-based efforts.
CONSUMER PORTFOLIO REVIEW
In the consumer portfolio, credit loss experience is expressed in terms of
annualized net credit losses as a percentage of average loans. Pricing and
credit policies reflect the loss experience of each particular product. 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. The
number of days is set at an appropriate level according to loan product and
country. The following table summarizes delinquency and net credit loss
experience in both the managed and on-balance sheet loan portfolios in terms of
loans 90 days or more past due, net credit losses, and as a percentage of
related loans.
17
<Page>
CONSUMER LOAN DELINQUENCY AMOUNTS, NET CREDIT LOSSES, AND RATIOS
<Table>
<Caption>
PRODUCT VIEW TOTAL 90 DAYS OR MORE AVERAGE
IN MILLIONS OF DOLLARS, LOANS PAST DUE (1) LOANS NET CREDIT LOSSES (1)
----------------------------------------------------------------------------------------------
EXCEPT TOTAL AND AVERAGE LOAN
AMOUNTS IN BILLIONS 2001(2) 2001(2) 2000(2) 1999(2) 2001(2) 2001(2) 2000(2) 1999(2)
- -----------------------------------------------------------------------------------------------------------------------------------
CARDS $ 121.4 $ 2,384 $ 1,671 $ 1,531 $ 114.6 $ 6,051 $ 4,367 $ 4,416
RATIO 1.96% 1.46% 1.59% 5.28% 4.21% 4.88%
North America Cards 110.8 2,209 1,522 1,333 104.6 5,655 4,017 3,979
RATIO 1.99% 1.46% 1.53% 5.41% 4.28% 4.87%
International Cards 10.6 175 149 198 10.0 396 350 437
RATIO 1.65% 1.45% 2.13% 3.96% 3.56% 5.00%
CONSUMER FINANCE 73.7 2,243 1,435 1,131 71.4 2,213 1,845 1,605
RATIO 3.04% 2.15% 1.94% 3.10% 2.96% 2.99%
North America Consumer Finance 59.6 2,001 1,284 960 57.7 1,527 1,339 1,224
RATIO 3.36% 2.38% 1.98% 2.65% 2.61% 2.71%
International Consumer Finance 14.1 242 151 171 13.7 686 506 381
RATIO 1.71% 1.17% 1.79% 5.01% 4.58% 4.48%
RETAIL BANKING 104.2 3,437 2,124 2,223 97.4 636 618 677
RATIO 3.30% 2.37% 2.82% 0.65% 0.76% 0.90%
North America Retail Banking 67.3 2,299 1,007 883 59.8 230 162 186
RATIO 3.42% 1.93% 2.18% 0.39% 0.36% 0.49%
International Retail Banking 36.9 1,138 1,117 1,340 37.6 406 456 491
RATIO 3.08% 2.99% 3.50% 1.08% 1.25% 1.33%
PRIVATE BANK(3) 25.2 135 61 120 24.9 14 23 19
RATIO 0.54% 0.23% 0.54% 0.06% 0.09% 0.10%
Other Consumer 3.9 11 9 7 3.4 46 (20) (24)
----------------------------------------------------------------------------------------------
TOTAL MANAGED $ 328.4 $ 8,210 $ 5,300 $ 5,012 $ 311.7 $ 8,960 $ 6,833 $ 6,693
RATIO 2.50% 1.75% 1.95% 2.88% 2.48% 2.80%
- -----------------------------------------------------------------------------------------------------------------------------------
Securitized receivables (68.3) (1,282) (1,012) (916) (63.8) (3,251) (2,228) (2,479)
Loans held for sale (11.9) (110) (110) (32) (14.2) (317) (182) (121)
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER LOANS $ 248.2 $ 6,818 $ 4,178 $ 4,064 $ 233.7 $ 5,392 $ 4,423 $ 4,093
RATIO 2.75% 1.83% 2.09% 2.31% 2.11% 2.24%
===================================================================================================================================
<Caption>
PRODUCT VIEW TOTAL 90 DAYS OR MORE AVERAGE
IN MILLIONS OF DOLLARS, LOANS PAST DUE (1) LOANS NET CREDIT LOSSES (1)
----------------------------------------------------------------------------------------------
EXCEPT TOTAL AND AVERAGE LOAN
AMOUNTS IN BILLIONS 2001 2001 2000(2) 1999(2) 2001 2001 2000(2) 1999(2)
- -----------------------------------------------------------------------------------------------------------------------------------
North America (excluding Mexico) $ 243.8 $ 5,567 $ 3,824 $ 3,203 $ 233.3 $ 7,353 $ 5,477 $ 5,348
RATIO 2.28% 1.58% 1.60% 3.15% 2.52% 3.06%
Mexico 11.4 1,032 16 17 5.4 117 14 14
RATIO 9.04% 4.68% 6.23% 2.15% 3.76% 1.59%
Western Europe 20.1 810 851 933 19.3 340 368 357
RATIO 4.04% 4.85% 5.42% 1.76% 2.18% 1.90%
Japan 16.5 192 103 118 16.8 590 410 271
RATIO 1.16% 0.75% 1.27% 3.52% 3.46% 2.95%
Asia (excluding Japan) 26.6 385 344 478 26.5 269 258 313
RATIO 1.44% 1.59% 2.05% 1.01% 1.18% 1.24%
Latin America 5.3 166 107 171 5.9 246 265 351
RATIO 3.16% 2.19% 3.25% 4.16% 5.06% 5.56%
CEEMEA 4.7 58 55 92 4.5 45 41 39
RATIO 1.22% 2.17% 4.28% 1.00% 1.81% 0.94%
----------------------------------------------------------------------------------------------
TOTAL MANAGED $ 328.4 $ 8,210 $ 5,300 $ 5,012 $ 311.7 $ 8,960 $ 6,833 $ 6,693
RATIO 2.50% 1.75% 1.95% 2.88% 2.48% 2.80%
- -----------------------------------------------------------------------------------------------------------------------------------
Securitized receivables (68.3) (1,282) (1,012) (916) (63.8) (3,251) (2,228) (2,479)
Loans held for sale (11.9) (110) (110) (32) (14.2) (317) (182) (121)
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER LOANS $ 248.2 $ 6,818 $ 4,178 $ 4,064 $ 233.7 $ 5,392 $ 4,423 $ 4,093
RATIO 2.75% 1.83% 2.09% 2.31% 2.11% 2.24%
===================================================================================================================================
</Table>
(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) Reclassified to conform to the 2002 presentation.
(3) The PRIVATE BANK results are reported as part of the Global Investment
Management segment.
18
<Page>
CONSUMER LOAN BALANCES, NET OF UNEARNED INCOME
<Table>
<Caption>
END OF PERIOD AVERAGE
------------------------------- -------------------------------
IN BILLIONS OF DOLLARS 2001(1) 2000(1) 1999(1) 2001(1) 2000(1) 1999(1)
- -----------------------------------------------------------------------------------------------------------
TOTAL MANAGED $ 328.4 $ 302.8 $ 257.2 $ 311.7 $ 275.5 $ 239.3
Securitized receivables (68.3) (60.6) (58.0) (63.8) (57.0) (51.0)
Loans held for sale (11.9) (13.3) (4.6) (14.2) (8.7) (5.5)
------------------------------- -------------------------------
ON-BALANCE SHEET $ 248.2 $ 228.9 $ 194.6 $ 233.7 $ 209.8 $ 182.8
===========================================================================================================
</Table>
(1) Reclassified to conform to the 2002 presentation.
Citigroup's allowance for credit losses of $10.088 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 $5.507 billion at December 31, 2001, $4.946
billion at December 31, 2000 and $5.220 billion at December 31, 1999. The
increase in the allowance for credit losses from 2000 was primarily due to the
acquisitions of Banamex and EAB. The allowance as a percentage of loans on the
balance sheet was 2.22% at December 31, 2001, compared to 2.16% at December 31,
2000 and 2.68% at December 31, 1999. The increase in the allowance as a
percentage of loans from the prior year primarily reflects the increase in the
allowance partially offset by growth in consumer loans. On-balance sheet
consumer loans of $248.2 billion grew $19 billion or 8% from December 31, 2000
primarily driven by the impact of the acquisitions of Banamex and EAB and growth
in CitiFinancial, mostly real estate secured loans. On-balance sheet loans in
Citi Cards declined in 2001 as growth in managed receivables was more than
offset by increased securitization activity. In addition, loans in 2001
increased in Japan and Western Europe, mainly in CONSUMER FINANCE, and decreased
in Asia and Latin America. The decline in Latin America loans primarily reflects
reductions associated with the re-denomination of certain consumer loans in
Argentina. Consumer net credit losses and loans 90 days or more past due are
expected to increase from 2001 levels as a result of portfolio growth and
seasonal factors and as uncertain global economic conditions persist. This
statement is a forward-looking statement within the meaning of the Private
Securities Litigation Reform Act. See "Forward-Looking Statements" on page 17.
GLOBAL CORPORATE PORTFOLIO REVIEW
Corporate loans are identified as impaired and placed on a nonaccrual basis
when it is determined that the payment of interest or principal is doubtful of
collection or when interest or principal is past due for 90 days or more, except
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.
The following table summarizes corporate cash-basis loans and net credit
losses:
<Table>
<Caption>
IN MILLIONS OF DOLLARS 2001(1) 2000(1) 1999(1)
- -------------------------------------------------------------------------
CORPORATE CASH-BASIS LOANS
Capital Markets and
Banking(2)(3)(4) $ 3,048 $ 1,901 $ 1,481
Transaction Services(3) 464 23 44
Insurance Subsidiaries 19 43 40
Investment Activities(5) 2 3 15
--------------------------------
TOTAL CORPORATE CASH-BASIS LOANS $ 3,533 $ 1,970 $ 1,580
=========================================================================
NET CREDIT LOSSES
Capital Markets and
Banking(2)(3)(4) $ 1,615 $ 735 $ 480
Transaction Services(3) 21 29 74
Investment Activities(5) - 7 -
--------------------------------
TOTAL NET CREDIT LOSSES $ 1,636 $ 771 $ 554
================================
CORPORATE ALLOWANCE FOR CREDIT
LOSSES $ 4,581 $ 4,015 $ 3,633
As a percentage of total corporate
loans 3.19% 2.90% 3.02%
=========================================================================
</Table>
(1) Reclassified to conform to the 2002 presentation.
(2) Prior period cash-basis loans were restated to change the policy of the
Associates Corporate Leasing business for suspending accrual of interest on
past due loans to conform with other leasing businesses in the Global
Corporate and Investment Bank. The prior policy of placing loans that are
60 days or more past due into cash-basis, was changed to 90 days or more
past due.
(3) 2001 includes Banamex cash-basis loans and net-credit losses.
(4) In 1999, excludes amounts related to manufactured housing, as such loan
origination operations were discontinued in early 2000. Excluded cash-basis
loans and net-credit losses relating to manufactured housing were $55
million and $36 million, respectively.
(5) Investment Activities results are reported in the Proprietary Investment
Activities segment.
Corporate cash-basis loans were $3.533 billion, $1.970 billion, and
$1.580 billion at December 31, 2001, 2000 and 1999, respectively. Cash-basis
loans increased $1.563 billion in 2001 primarily due to increases in CAPITAL
MARKETS AND BANKING, and TRANSACTION SERVICES. CAPITAL MARKETS AND BANKING
primarily reflects increases in the telecommunications, energy, utility and
retail industries, combined with increases in CitiCapital, Mexico, Latin
America, mainly Argentina, and Asia, mainly Australia and New Zealand.
CitiCapital increased primarily due to increases in the transportation
portfolio. The increase in Mexico primarily reflects the acquisition of
Banamex which includes exposures in steel, textile, food products and other
industries. TRANSACTION SERVICES increased primarily due to increases in
Mexico due to the acquisition of Banamex. Cash-basis loans increased $390
million in 2000 primarily due to increases in CAPITAL MARKETS AND BANKING
which reflects increases in the telecommunications, energy, utility and
retail industries, the acquisition of Bank Handlowy as well as increases in
CitiCapital, partially offset by improvements in Asia.
Total Other Repossessed Assets were $144 million, $292 million and $256
million at December 31, 2001, 2000 and 1999, respectively, primarily reflecting
increases in repossessed transportation equipment and the acquisition of
Banamex.
19
<Page>
Total Corporate loans outstanding at December 31, 2001 were $144 billion
compared to $138 billion and $120 billion at December 31, 2000 and 1999,
respectively.
Total corporate net credit losses of $1.636 billion in 2001 increased $865
million compared to 2000 reflecting increases in the transportation leasing
portfolio, higher net credit losses in the telecommunications, energy, retail
and airline industries as well as write-downs in Argentina. Total corporate net
credit losses of $771 million in 2000 increased $217 million compared to 1999
primarily reflecting increases in the transportation leasing portfolio, higher
net credit losses in the health care industry, 1999 recoveries on real estate
loans and the inclusion of losses for Copelco, partially offset by improvements
in Asia, mainly China, Indonesia, Australia and Thailand, and in CEEMEA.
Citigroup's allowance for credit losses of $10.088 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 $4.581 billion at December 31, 2001 compared to
$4.015 billion and $3.633 billion at December 31, 2000 and 1999, respectively.
The increase in the allowance at December 31, 2001 primarily reflects the
acquisition of Banamex. The increase in the allowance at December 31, 2000
primarily reflects additional provisions related to the transportation
portfolio. 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. Corporate net credit losses and
cash-basis loans may increase from the 2001 levels due to weakening global
economic conditions, the economic crisis in Argentina, sovereign or regulatory
actions and other factors. This statement is a forward-looking statement within
the meaning of the Private Securities Litigation Reform Act. See
"Forward-Looking Statements" on page 17.
20