Slide 1: Update on Investment Initiatives
Update on Investment Initiatives October 27, 2006
Slide 2: Changing the business model
Update on Investment Initiatives Changing the business model A balanced approach to driving growth Organic growth focus; targeted acquisitions Big shift from acquisition-led strategy Connecting our businesses Breaking down silos Leveraging distribution and products across businesses Sharing expertis
Slide 3: Investing in Organic Growth: Different Investment Models
Investing in Organic Growth Different Investment Models Consumer Expanding distribution footprint; reaching new customers Integrating our businesses Longer payback, less volatile returns CIB Expanding product capabilities; driving increased client activity Expanding coverage of new client segments F
Slide 4: Investment Spending
Investment Spending International Consumer Branches/Sales Force $130 $430 Incremental Cards Acquisitions 45 75 Other 50 25 Total $225 $530 ~4 ~9 U.S. Consumer Branches $5 $100 Channel & Sales Force Expansion 0 50 Total $5 $150 ~6 ~14 Corporate & Invest. Banking $660 $360 Other (1) 110 130 Total Citi
Slide 5: Results from 2005 and 2006 Investments
Results from 2005 and 2006 Investments ($MM) Investments: Results Momentum 716 303 523 0 (5) (101) 4 70 (5) 146 51 57 611 298 648 163 392 178 606 158 28 8 414 251 (8) (65) (32) (35) (46) 1Q'05 2Q'05 3Q'05 4Q'05 1Q'06 2Q'06 3Q'06 Revenues Expenses Net Income (ex-CIB) Net Income
Slide 6: International Consumer: Strategic Initiatives
Expand distribution 223 new Retail Banking branches, 351 new Consumer Finance branches and 146 new ALMs in Japan YTD 2006 Focus on Mexico, Brazil, India, Russia, and other countries Expanded sales force by approximately 2,000 YTD ~700 new ATMs YTD, bringing total to 9,600 Cards Co-branding agreement
Slide 7: International Consumer Finance Investments
International Consumer Finance Investments Avg. Loans ($MM): 1179 178 345 546 799 1,106 ($MM) Incremental de novo branches: 72 68 80 97 130 111 110 132+ ~70% more branches than at EOP 2004 Quarterly EBT per Branch Quarters on Book (4) (2) Excludes Japan ALMs. (3) Data is for branches in emerging mar
Slide 8: International Cards Franchise Growth
International Cards Franchise Growth Cumulative New Accounts (M) Average Results for New Accounts Results from 2Q’05 Account Acquisitions ($MM) Mature Rev / Acct Mature Pre-Tax Income/ Acct 44% more accounts than at EOP 2004 (1.3 from incremental investments) Note: Excludes impact of attrition. $ /
Slide 9: International Retail Banking Investments
International Retail Banking Investments Average branch model: Break-even ~16 months Payback ~36 months Full maturity ~5 years Incremental de novo branches: 20 21 17 78 72 85 66 101+ ~19% more branches than at 2004 EOP Avg. Deposits ($MM): 306 815 1367 1,939 3,173 3,625 5,679 Results from ’05-’06 In
Slide 10: U.S. Consumer: Strategic Initiatives
U.S. Consumer: Strategic Initiatives Incremental Investments of $5MM in ’05 and $150MM in ’06 Managing to a broader set of value drivers Migrating from a primarily M&A-driven strategy to a more balanced approach Expand distribution 200 new CitiFinancial branches; 100 new Retail Banking branches in 2
Slide 11: U.S. Consumer: New CitiFinancial Branches
Citigroup market share (2005) 4.7% Incremental de novo branches: 25 65 62 U.S. Consumer: New CitiFinancial Branches 48+ ~9% more branches than at EOP 2005 Results from 2006 Investments ($MM) 2006 Avg. Branch Performance ($M) CAGR 16% Cumulative De Novo Branches Since 2005 U.S. Consumer Finance Marke
Slide 12: U.S. Consumer: New Citibank Branches
U.S. Consumer: New Citibank Branches U.S. Retail Banking Market Revenue ($B) Results from ’05-’06 Investments ($MM) Citigroup market share (2005) 1.3% 3 39 127 247 418 859 Cumulative De Novo Branches Since 2004 Incremental de novo branches: 2 6 3 12 11 9 39 CAGR 6% Note: Market size includes all bra
Slide 13: U.S. Consumer: Other Investments
380% U.S. Consumer: Other Investments Full service internet bank Serve customers regardless of bank presence E-Savings: Est. $10B deposits by y/e 2/3 is new money 44% of new-to-bank customers outside BTA Equal to roughly 100 branches worth of deposits Launch of low-cost online loans Citibank Direct
Slide 14: U.S. Consumer: Leveraging Across Businesses
U.S. Consumer: Leveraging Across Businesses Smith Barney è Citibank Platform Quality of FA Brand and position Citibank è Smith Barney FDIC deposits of $45B+ generated by Smith Barney channel vs. $87B from Retail Bank Mortgage originations $8B annually; largest Citi channel Commercial Lending pipelin
Slide 15: CIB: Strategic Initiatives
CIB: Strategic Initiatives Structured Credit Equity Derivatives Prime Brokerage Commodities FX Options Commercial Real Estate Finance Client Expansion CDOs; Derivatives; Tailored solutions Expanding distribution and new products Equity Finance services Power & Gas; Oil & Metals; Derivatives Structur
Slide 16: CIB: Investment Results
CIB: Investment Results Initiative Revenue as a % of Total CIB Revenue ($MM) 6,037 5,156 6,434 6,236 7,279 6,761 6,067 132 163 279 234 461 485 464 2% 3% 4% 4% 6% 7% 8% 1Q'05 2Q'05 3Q'05 4Q'05 1Q'06 2Q'06 3Q'06 Initiative Revenue Total CIB Revenue excluding investments Initiative as a % of Total CIB
Slide 17: Structured Credit: Growth & Opportunities
Increased market penetration of CDOs / CLOs from 50% in 2005 to 63% in 2006 Ranked #1 in Top-3 dealer relationships (1) Correlation trading build-out Deepen Investor Relationships Revenue ($MM) Hired senior talent Technology spend doubled from 2004 to 2006 as we built out the trading platforms Integ
Slide 18: Commodities: Growth and Opportunities
Citigroup Counterparties Product Capability Delivered in 2006 Doubled staffing Focused on linking product capabilities to corporate coverage footprint Training program for corporate, investment and municipal bankers Expanded geographic presence in Houston, London and Singapore Established operations
Slide 19: Operations & Technology: Initiatives
IT simplification and standardization expected to yield approximately $2.0B in efficiency over the next 3 years Data Center Consolidation Simplification Standardization Interoperability Low Cost Locations Complexity Reduction Process Reengineering Leverage Global Call Centers Utilities – Global Proc
Slide 20: Operations & Technology: Initiatives
Operations & Technology: Initiatives Data Center Consolidation Developers in Low Cost Locations 52 43 38 35 29 2005 2007E 2008E 2009E Number of Data Centers 7.6 8.3 9.1 7.2 35% 37% 33% 4Q'05 1Q'06 2Q'06 3Q'06 # of Developers (M) % of Total Developers 2006E 39%
Slide 21: Our Priorities
Our Priorities Execute strategic initiatives Expanding distribution Transferring expertise Investing in technology and people Allocating capital Sustain investment spending Targeted acquisitions Expense discipline Long-term Goals Mid-to-high single digit organic revenue growth Faster earnings growth
Slide 22: Certain statements in this document are “forward-looking statements” within the meaning of the Private
Certain statements in this document are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially f