Chirag Garg & Salman Khan | NYSE:C | October 12, 2001

What is Citigroup?

ƒTicker symbol C on the Pacific Stock Exchange and NYSE

ƒA diversified financial services company encompassing Investment Banking, Commercial Banking and Insurance

ƒBoth consumer and corporate clients in over 100 Countries/Territories

1 Management & Info

ƒ Management ƒ CEO Sandy Weill ƒ CFO Todd Thomson ƒ COO Bob Druskin

ƒ Current Stock Price: $ 42.70

ƒ The company is divided into three lines of business.

Global Consumer Business

ƒ Citibank ƒ SSB Private Equity/ Private Banking ƒ Cards ƒ Consumer Financing ƒ Insurance

2 Asset Management

ƒ Similar to Private Equity/ Banking except open to all high net worth clients.

Global Corporate Business

ƒ SSB ƒ Global Relationship Banking ƒ Emerging Markets ƒ Property Insurance ƒ E-Business

3 Financial Services Market

ƒComprises of investment banks, commercial banks and insurance companies.

ƒDiversified financial services includes two or more of these aspects.

ƒGlass-Steagall Act void.

ƒOperating above the S&P in the past and present. Will do until S&P picks back up.

ƒCredit Card use on the rise; bankruptcy laws set to change.

FIN SERVICES

S&P 500

CITIGROUP

Competitors

ƒ Primary ƒ American Express (NYSE:AXP) $29.99 ƒ Morgan Stanley (NYSE:MWD) $51.46

ƒ Secondary ƒ JP Morgan Chase (NYSE:JPM) $32.49 ƒ Credit Suisse First Boston (NYSE:CSR) $34.05

4 Competitive Advantage

ƒ Diversification

ƒ Financial Services Market

ƒ Credit Card Debt/ Increased Use

Qualitative Reasoning

ƒEmerging Markets Investment ƒHigh competitor ƒBest in Latin America

ƒCredit Card Debt

ƒLow Borrowing Rates (2.5%)

ƒWealthy clientele

ƒInsurance

ƒInvestment Banks needed

5 Quantitative Reasoning

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Competitive Analysis

Citigroup(C) American Express(AXP) Morgan Stanley (MWD) Unit Price 42.7 29 49.26 $ Market Cap 214,800.00 38400 54600 $MM 52-Week High 57.375 61.438 90.49 $ 52-w eek Low 34.51 24.2 35.75 $ % of high 74.4 47.2 54.4 % % over low 124 120 138 % Price/Earnings(ttm) 16.19 18.42 14.2 x Price/Book(mrq) 3.12 3.27 2.8 x Profit Margin(ttm) 11.6 9.2 8.5 % Return on Equity(ttm) 22.7 18.64 20.88 %

6 Dividend Discount Model

DIVIDEND DISCOUNT MODEL FOR STABLE GROWTH: Scenario 1 Scenario 2 Damodaran Figures (Past 4 yrs)

ROE 17% 17% Modified Dividend Payout Ratio 56.40% 70.59%

Growth till perpetuity 5.00% 5.00% Current Earnings ($BN) $13.99 $13.99 Risk Free Rate 5.10% 5.10% Risk Premium 4.00% 4.00% Beta 1.00 1.00 Cost of Equity 9.10% 9.10%

Valuation Value of Equity ($BN) $202.11 $252.90 # of Shares (BN) 5.03 5.03 Intrinsic Value per share $40.18 $50.28 Actual Value per share $42.70 $42.70

Judah Kraushaar

ƒTop analyst at Merrill Lynch says:

ƒExceptional Diversification

ƒUndervalued

ƒNot yet living up to forecasted P/E

ƒ3Q trough and yet still 18% ROE

ƒStock could double within a year

ƒ(Taken on October 3 2001)

7 P/E Spread Model

P/E Spread 2000 2001 2002 2003 Earnings 13.52 15.41 17.57 20.03 Shares Outstanding 5.02 5.02 5.02 EPS 3.07 3.50 3.99 at 14x 42.98 49.00 55.86

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