Citigroup 4th Quarter and Full Year 2003 Earnings Review Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Richard Strauss - Deutsche Banc - Analyst : Okay. Thank you, Deutsche. Good afternoon, Todd. Just a couple of questions here. First I know equities is an area that you said you would focus on this year. In terms of what exactly happened in the quarter, was the weakness, was this overnight? Was this derivatives? Was this the loss of share in the cash business? And when you talk about a remedy going forward, you know, maybe you could just get a little bit more specific as to the plan.

Question: Richard Strauss - Deutsche Banc - Analyst : Okay. And then looking at the insurance portfolio, you talked about the drop in the yield. But it was pretty substantial, about 60 basis points and a 660 rate last quarter. You said some higher investing assets, I guess ran off. Was this -- are you -- was this mostly mortgage-related type assets and are you most of the way through this now? And what would your guidance be on the portfolio going forward?

Question: Richard Strauss - Deutsche Banc - Analyst : Okay. Thank you.

Question: Guy Lastrowsky - Merrill Lynch - Analyst : Thank you, Merrill Lynch. Good morning. Good afternoon, I guess.

Question: Guy Lastrowsky - Merrill Lynch - Analyst : Yeah. Question on credit cards you referred to the fact that you had somewhat better credit experience as you applied your credit capabilities within the Sears portfolio. I'm looking at operating expense ratios and basically seeing that for the quarter as a whole having integrated that portfolio, it looked like you had a pretty good outcome in terms of your operating expenses not being much higher on a percent of assets basis than they had about. And the same really true on the credit side. Should we be looking at these types of ratios when we apply the numbers that we saw this quarter to the average assets under management as kind of the run rate for next year. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. JANUARY 20, 2004 / 5:15PM, C.N - Citigroup 4th Quarter and Full Year 2003 Earnings Review

Question: Guy Lastrowsky - Merrill Lynch - Analyst : And how about in terms of operating expenses?

Question: Guy Lastrowsky - Merrill Lynch - Analyst : As a ratio to assets?

Question: Guy Lastrowsky - Merrill Lynch - Analyst : Okay. That's helpful. You talk a little bit throughout the presentation about some of the investments that you have been making in a number of businesses, which obviously have created this negative operating leverage that we saw in a lot of businesses this year. Do you think you can give us a little bit more color on what some of those have been business by business? I'm looking for example at international cards. Obviously, there was a very large increase in expenses relative to a year ago and some of that is, you know, blamed on Diner's, but, you know, how much of that is one time, versus run rate expenses.

Question: Guy Lastrowsky - Merrill Lynch - Analyst : That's helpful, thanks. One final question just on GCIB. We're looking at the non-comp ratio here being up to 25% which is not a number I recall seeing for that business ex something extraordinary. What really happened there? Is that more investment spending?

Question: Guy Lastrowsky - Merrill Lynch - Analyst : Okay. That's great. Thanks. Just one more little thing here on the coincident managed ncl rate on the bank card business. I see it went up from 5.75% to 6.17% from the third quarter to the fourth. With you attribute that all to the bank card portfolio of Sears.

Question: Guy Lastrowsky - Merrill Lynch - Analyst : Okay. Great. Thanks.

Question: Henry McVey - Morgan Stanley - Analyst : Hi, it's Henry McVey with Morgan Stanley.

Question: Henry McVey - Morgan Stanley - Analyst : Thanks. Thanks.

Question: Henry McVey - Morgan Stanley - Analyst : I will try not to. Just a couple of quickies. One was the balance sheet, it looked like your trading assets were up 49% year over year, but tangible equity was down.

Question: Henry McVey - Morgan Stanley - Analyst : How do you -- I mean -- mostly --

Question: Henry McVey - Morgan Stanley - Analyst : But $40 billion jump and then on the tangible equity, despite all the -- I mean is that something it looked like tangible book value is down again. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. JANUARY 20, 2004 / 5:15PM, C.N - Citigroup 4th Quarter and Full Year 2003 Earnings Review

Question: Henry McVey - Morgan Stanley - Analyst : But you don't run the business thinking it's measured on the tangible?

Question: Henry McVey - Morgan Stanley - Analyst : Just a couple of other quickies. One was just overall currency impact for the quarter on earnings? It looked like if you looked at Japan and Europe you got a little bit of a kick there.

Question: Henry McVey - Morgan Stanley - Analyst : Mm-hmm.

Question: Henry McVey - Morgan Stanley - Analyst : A slight negative.

Question: Henry McVey - Morgan Stanley - Analyst : And just on the businesses, when you give your outlook --. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. JANUARY 20, 2004 / 5:15PM, C.N - Citigroup 4th Quarter and Full Year 2003 Earnings Review

Question: Henry McVey - Morgan Stanley - Analyst : Yeah. Just on the outlook you said the retail bank you needed to focus on investment product sales and that's something we heard from Marge. But when I was going through the segment reporting it looked like investment product sales were actually down sequentially and have been flat since '02 and then you look at the PFS loans and they were actually down. I'm just trying to quantify how you feel confident with the upbeat forecast.

Question: Henry McVey - Morgan Stanley - Analyst : What about the Citibank North America.

Question: Henry McVey - Morgan Stanley - Analyst : Right.

Question: Henry McVey - Morgan Stanley - Analyst : And two other quickies. One was on transaction --

Question: Henry McVey - Morgan Stanley - Analyst : Just on transaction services if you look at liability balances up 21%, if you look at the assets under custody up 24%, but the revenues were actually flat. So is this -- are you sure you want to be redeploying a lot more resources and attention into something, there has to be interest rate pressure or pricing pressure. How do you think about that?

Question: Henry McVey - Morgan Stanley - Analyst : Okay and just final question is on the cards. I think at the time of Sears we had -- I thought it was $64 million accounts and then it looked like sequentially your accounts were only up around $32.5 million. That was the first question, and then second is if it goes to 9 to 10% chargeoffs, then that's 100 to 200 per quarter but you didn't really give us a guidance on how that will season. Is that a first quarter or second quarter or third quarter event? How does that work out?

Question: Henry McVey - Morgan Stanley - Analyst : Okay.

Question: Henry McVey - Morgan Stanley - Analyst : Okay. Good. Thanks for your help.

Question: Henry McVey - Morgan Stanley - Analyst : Thanks.

Question: Glenn Schorr - UBS - Analyst : Thanks, UBS. Hey Todd.

Question: Glenn Schorr - UBS - Analyst : In M&A, the $140ish million pickup, is that all true advisory fees, or is there--could you give a split between syndicated lending because I know there was a pretty good pickup in the quarter.

Question: Glenn Schorr - UBS - Analyst : Sorry inside GCI base.

Question: Glenn Schorr - UBS - Analyst : The advisory and other fees. Just even if it's, you know, color of the $140 million sequential pickup, how much is advisory versus syndicated lending.

Question: Glenn Schorr - UBS - Analyst : No problem. We can move on. How about a comment on just pipelines in general between M&A --

Question: Glenn Schorr - UBS - Analyst : Pipelines in general for both the investment banking and M&A categories.

Question: Glenn Schorr - UBS - Analyst : Understood. Your commentary on asset management outlook for single digits. My gut is if the equity markets had a normal year and your flows continued, the operating leverage in that business can easily produce well into the double digit earnings growth. So I want to get at the conservatism. Is it revenue or expense driven? Meaning is there pricing pressure on the outlook, or do you feel that there are certain expenses borne by the asset management business that used to be paid in commissions that might be paid in cash? I'm just trying get my arms around it.

Question: Glenn Schorr - UBS - Analyst : Fair enough. Fair enough. Maybe last question, on the operating leverage side --.

Question: Glenn Schorr - UBS - Analyst : That one maybe. On the operating leverage side you spoke about the continuing headwinds in '04 and put some numbers around it. In your 2003 investments, the $650 million increase over '02, clearly there are some there that hopefully don't happen like repositioning, restructuring, maybe even some front end expansion and product development. Is it possible that that bucket of expenses is down year over year or is that wishful thinking?

Question: Glenn Schorr - UBS - Analyst : The year over year increase, meaning less than $650 million?

Question: Glenn Schorr - UBS - Analyst : Okay. Got you. Okay. Thanks very much.

Question: Andy Collins - Piper Jaffray - Analyst : Yes, Piper Jaffray. Good afternoon. Just quickly kind of I don't want to beat a dead horse, but on the global card business, if the way I do my math is correct and, you know, your revenues were up a ton here in the fourth quarter, and I was just wondering if you back out the Sears card whether or not those dynamics will kind of continue into the fourth quarter. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. JANUARY 20, 2004 / 5:15PM, C.N - Citigroup 4th Quarter and Full Year 2003 Earnings Review

Question: Andy Collins - Piper Jaffray - Analyst : Okay.

Question: Andy Collins - Piper Jaffray - Analyst : So we could expect perhaps the margins to at least maintain, if not get a little bit better?

Question: Andy Collins - Piper Jaffray - Analyst : Okay. And kind of one other question. You touched a lot on the lines of business for '04. I was wondering if you could talk a little bit about share count because there was a pickup in the fourth quarter and you kind of slowed down on your repurchase program.

Question: Andy Collins - Piper Jaffray - Analyst : And finally on credit, any kind of overview or overarching comment on credit.

Question: Andy Collins - Piper Jaffray - Analyst : And just the credit, kind of any overarching comments on credit? You did mention just on private label but you didn't talk really overall credit.

Question: Andy Collins - Piper Jaffray - Analyst : Consumer and corporate, if you could.

Question: Andy Collins - Piper Jaffray - Analyst : Great. Thank you.

Question: Jon Balkind - Fox-Pitt Kelton - Analyst : Fox-Pitt Kelton.

Question: Jon Balkind - Fox-Pitt Kelton - Analyst : You mentioned the tax rate. Just wondering how it flowed through the business lines. It looked like the global retail bank was down meaningfully. Is that just international exposure there or is there something else going on? And then a second question will be on the consumer finance business.

Question: Jon Balkind - Fox-Pitt Kelton - Analyst : Okay and then second you continue to reduce head count and branches in Japan. Are you guys pretty much done with that process or will we continue to see you shrink the organization over there.

Question: Jon Balkind - Fox-Pitt Kelton - Analyst : Great. Thanks, Todd.

Question: Mike Mayo - Prudential Equity Group - Analyst : Prudential equity group.

Question: Mike Mayo - Prudential Equity Group - Analyst : Hey, Todd. Can you just give a quick thumbnail sketch by region? You did it by product area, but where do you expect the strongest growth by region? You mentioned Asia. And then separately what are your priorities for acquisitions in 2004? Thanks.

Question: Mike Mayo - Prudential Equity Group - Analyst : And with regard to acquisitions, I mean since your last quarterly earnings conference call you had Bank America, Fleet, and now JP Morgan- Bank One, what is your preference to gather U.S. deposits? Is that still a priority and what are your other acquisition priorities.

Question: Mike Mayo - Prudential Equity Group - Analyst : Thank you. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. JANUARY 20, 2004 / 5:15PM, C.N - Citigroup 4th Quarter and Full Year 2003 Earnings Review