FINAL TRANSCRIPT C - Q4 2007 Citigroup Inc. Earnings Conference Call Event Date/Time: Jan. 15. 2008 / 8:30AM ET www.streetevents.com Contact Us © 2008 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial. FINAL TRANSCRIPT Jan. 15. 2008 / 8:30AM, C - Q4 2007 Citigroup Inc. Earnings Conference Call CORPORATE PARTICIPANTS Art Tildesley Citigroup Inc. - IR Vikram Pandit Citigroup Inc. - CEO Gary Crittenden Citigroup Inc. - CFO CONFERENCE CALL PARTICIPANTS Guy Moszkowski Merrill Lynch - Analyst Betsy Graseck Morgan Stanley - Analyst William Tanona Goldman Sachs - Analyst Mike Mayo Deutsche Bank - Analyst Meredith Whitney Oppenheimer - Analyst Glenn Schorr UBS - Analyst Richard Bove Punk, Ziegel - Analyst David Hilder Bear Stearns - Analyst PRESENTATION Operator Good morning, ladies and gentlemen and welcome to Citi©s fourth-quarter and full-year 2007 earnings review featuring Citi Chief Executive Officer, Vikram Pandit and Chief Financial Officer, Gary Crittenden. Today©s call will be hosted by Art Tildesley. We ask that you hold all questions until the completion of the formal remarks at which time you will be given instructions for the question and answer session. Also, as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. Mr. Tildesley, you may begin. Art Tildesley - Citigroup Inc. - IR Thank you very much, operator and thank you all for joining us this morning. Welcome to our fourth-quarter 2007 earnings presentation. The presentation that we will be walking through is available on our website, so you will want to download that now if you haven©t already done so. The format we will follow is Vikram will begin the call. Gary will take you through the presentation. Vikram will have some concluding remarks, then we©d be happy to take any questions -- or questions that you may have. www.streetevents.com Contact Us 1 © 2008 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial. FINAL TRANSCRIPT Jan. 15. 2008 / 8:30AM, C - Q4 2007 Citigroup Inc. Earnings Conference Call Before we get started, I©d like to remind you that today©s presentation may contain forward-looking statements. Citigroup©s financial results may differ materially from these statements, so please refer to our SEC filings for a description of the factors that could cause our actual results to differ from expectations. With that said, let me turn it over to Vikram. Vikram Pandit - Citigroup Inc. - CEO Thank you, Art. Good morning, everyone and thanks for joining us today. Going forward, Gary will host these quarterly conference calls, but I thought it was important for me in my first few weeks to share with you some comments on our performance and also on the changes we are making at the Company. Let me start though first by stating very clearly that Citi©s fourth-quarter results are unacceptable; the subprime market deterioration has been unprecedented; other credit metrics such as consumer credit have weakened as well. Even so, we need to do better and we will do better. As you know by now, we took over $18 billion in write-downs and losses on our subprime exposures. We increased our reserves and had losses in our US consumer business, up over $4 billion, and these numbers completely overwhelmed record performance in many, many of our other large businesses, as well as strong performance in a number of our other businesses. These are obviously complicated times in the market and we want to be transparent with you on the risks we have and their impact on our results. We will be very candid with you today and also in the future so that you can fully understand the decisions we make. In my five weeks as CEO of Citi, I have had an opportunity to meet a number of our people, our clients, our investors and regulators and I plan to continue to do that. And I have not yet finished the analysis of the work I said I would to position our businesses for the future. And I am continuing to do that and I will report to you on that when I am done. But the actions we are taking today should not wait for that comprehensive review. They are completely consistent with my direction and what I believe must be done now. We have terrific people at Citi and we have great, great support from our clients as well. The areas that need immediate attention and actions are our balance sheet, risk management and expenses. Let me go through these one by one. Starting with the balance sheet, we have taken actions to significantly strengthen our capital base. This morning, we announced a comprehensive set of actions that will position us well and allow us to refocus on earnings and earnings growth for the future. First, we raised $12.5 billion from sophisticated long-term investors and we are very pleased with the support and the vote of confidence. We are also planning a public offering of our securities to all other shareholders. This capital not only positions us well against our [books] and the economy, but also creates significant flexibility to serve our clients and to take advantage of market opportunities that can be very beneficial to our franchise. Second, the Board has reset the dividend to a level that is aligned with our business mix and aligned with the growth opportunities we see for each of our businesses. And Gary will take you through our thinking on that. Third, we will continue to divest non-core assets that are misaligned or do not adequately support our growth strategies. We are in the process of divesting some of them now and this is a part of the broader review of our businesses that I©m conducting. And lastly, we are completely focused on recycling our balance sheet to take capital away from low or nonproducing assets. We have had great success over the last few weeks and I believe we can redeploy significant amounts more profitably. www.streetevents.com Contact Us 2 © 2008 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial. FINAL TRANSCRIPT Jan. 15. 2008 / 8:30AM, C - Q4 2007 Citigroup Inc. Earnings Conference Call In summary, we have taken a comprehensive and necessary set of actions to significantly strengthen our balance sheet. While the environment continues to be uncertain and the results will definitely be influenced by the economy, these actions allow us to be on our front foot focused on opportunities to drive our earnings and earnings growth. When you look at the major secular growth trends in financial services, many of our large businesses are positioned squarely against this growth and hence, the strong numbers this year in a number of businesses. In particular, we had record results in wealth management, international consumer, Asia Pacific, Latin America and global transaction services. Let me turn to risk, which is our second key priority. As some of you know, I have had some experience in this area and am actively involved in enhancing and reshaping our risk philosophy, along with the goal of having the best risk management in the business. The first priority on risk has been to make sure that our legacy portfolio of assets to subprime and mortgage areas are separated and managed to be optimized and we have done that. We have also made sure they are well-capitalized. Going forward, we are enhancing our risk culture and involving new talents. I have asked Jamie Forese to chair the markets and banking risk committee. In addition, I will sit on this committee and be an active hands-on participant. We are also strengthening independent risk management and over time, risk management will become a key competitive advantage for us, driving bottom-line results. Let me turn to the third area that we are critically focused on which is expense management. Under Gary©s leadership, our reengineering plan for 2008 is well underway. In the fourth quarter, we have already reserved for significant headcount reductions in markets and banking and we continue to make plans for further productivity improvements. You can interpret this current quarter©s $539 million charge as a down payment on the productivity efforts we are working on. The other business reviews are in process with the goal of increasing productivity and right-sizing our staffing levels. And while we have a clear idea of where we are headed, I will not do anything without the right diligence. Let me spend a minute on our people, our most important assets. As I have been talking to them and meeting them around the world and across all our businesses, we have attracted some of the best talent in the world. We are going to manage this talent more effectively by incentivizing people through a system of meritocracy where we pay for performance and by putting the right people in the right places. Let me just highlight a few critical actions we have already taken. I have asked Michael Schlein and Jamie Forese to run the markets and banking area. I have asked Hamid Biglari, one of our most talented people, to be Chief Operating Officer of this business. They will focus on driving productivity and on positioning our businesses for future growth.