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                              UNITED STATES STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q

            (Mark One)
              (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended MARCH 31, 1998
                                       OR
              ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

              For the transition period from ________ to _________
 
                             Commission File Number
                                     1-1861

                               THE CIT GROUP, INC.
             (Exact name of registrant as specified in its charter)

         DELAWARE                                               13-2994534
(State or other jurisdiction of                               (IRS Employer
incorporation or organization)                              Identification No.)

 1211 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK                  10036
    (Address of principal executive offices)                    (Zip Code)

                                 (212) 536-1390
              (Registrant's telephone number, including area code)

________________________________________________________________________________
      (Former name, former address and former fiscal year, if changed since
                                 last report.)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.
                                               Yes __X__         No ____

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock,  as of April 30, 1998:  Class A common stock - 37,167,810  shares;
Class B common stock - 126,000,000 shares.

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<PAGE>

                      THE CIT GROUP, INC. AND SUBSIDIARIES
                                   (UNAUDITED)

      TABLE OF CONTENTS                                                   PAGE
                                                                          ----
PART I. FINANCIAL INFORMATION

  Item 1. Condensed Financial Statements
          Consolidated Balance Sheets - March 31, 1998 and
            December 31, 1997.                                              2
          Consolidated Income Statements for the three
            month periods ended March 31, 1998 and 1997.                    3
          Consolidated Statements of Changes in Stockholders' Equity for
            the three month periods ended March 31, 1998 and 1997.          4
          Consolidated Statements of Cash Flows for the three
            month periods ended March 31, 1998 and 1997.                    5
          Notes to Condensed Consolidated Financial Statements.           6-7

  Item 2. Management's Discussion and Analysis of Financial
            Condition and Results of Operations                          8-21

PART II.  OTHER INFORMATION

  Item 6. Exhibits and Reports on Form 8-K                                 22

                          PART I. FINANCIAL INFORMATION

      Certain  information  and footnote  disclosures  normally  included in the
consolidated financial statements prepared in accordance with generally accepted
accounting  principles have been condensed or omitted  pursuant to the rules and
regulations  of the Securities and Exchange  Commission.  It is suggested  these
condensed  consolidated  financial  statements be read in  conjunction  with the
consolidated financial statements and notes thereto included in the December 31,
1997 Annual  Report on Form 10-K for The CIT Group,  Inc. (the  "Company").  The
discussion  of the adoption of Statement of Financial  Accounting  Standards No.
130, "Reporting  Comprehensive Income" as of January 1, 1998 is included in Item
1. Financial Statements.


                                      -1-
<PAGE>

                      THE CIT GROUP, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                              (Amounts in Millions)

                                            March 31,              December 31,
                                              1998                     1997
                                              ----                     ----
                                          (unaudited)
Assets
Financing and leasing assets
Loans
  Commercial                                $10,264.9               $ 9,922.5
  Consumer                                    3,733.1                 3,664.8
Commercial lease receivables                  4,102.1                 4,132.4 
                                            ---------               ---------
  Finance receivables                        18,100.1                17,719.7
Reserve for credit losses                      (240.2)                (235.6) 
                                            ---------               ---------
  Net finance receivables                    17,859.9                17,484.1
Operating lease equipment, net                2,054.2                 1,905.6
Consumer finance receivables                                     
  held for sale                                 846.2                   268.2
Cash and cash equivalents                       242.2                   140.4
Other assets                                    713.0                   665.8
                                            ---------               ---------
  Total assets                              $21,715.5               $20,464.1
                                            =========               =========
Liabilities and Stockholders' Equity
Debt
Commercial paper                            $ 5,835.5               $ 5,559.6
Variable rate senior notes                    3,100.0                 2,861.5
Fixed rate senior notes                       7,151.7                 6,593.8
Subordinated fixed rate notes                   300.0                   300.0
                                            ---------               ---------
  Total debt                                 16,387.2                15,314.9
Credit balances of factoring clients          1,243.4                 1,202.6
Accrued liabilities and payables                720.4                   660.1
Deferred federal income taxes                   614.8                   603.6
                                            ---------               ---------
  Total liabilities                          18,965.8                17,781.2
Company-obligated mandatorily redeemable                     
 preferred securities of subsidiary trust                    
 holding solely debentures of the Company       250.0                   250.0

Stockholders' equity 
Class A common stock, par value $0.01 per 
 share,  700,000,000  shares authorized
 and  37,167,810  and  37,173,527 issued 
 and  outstanding  at March 31, 1998 and
 December 31, 1997, respectively                  0.4                     0.4
Class B common stock, par value $0.01 per 
 shares, 510,000,000 shares authorized and 
 126,000,000 issued and outstanding               1.3                     1.3
Paid-in capital                                 949.7                   948.3  
Retained earnings                             1,548.3                 1,482.9
                                            ---------               ---------
  Total stockholders' equity                  2,499.7                 2,432.9
                                            ---------               ---------
  Total liabilities and stockholders'                           
  equity                                    $21,715.5               $20,464.1
                                            =========               =========
See accompanying notes to condensed consolifinancial statements.


                                      -2-
<PAGE>

                      THE CIT GROUP, INC. AND SUBSIDIARIES
                         CONSOLIDATED INCOME STATEMENTS
                 (Amounts in Millions, except per share amounts)

                                                    Three Months Ended
                                                         March 31,
                                              ------------------------------
                                               1998                    1997
                                               ----                    ----
                                                        (unaudited)
Finance income                                $472.6                  $437.1
Interest expense                               244.6                   223.1
                                              ------                  ------

  Net finance income                           228.0                   214.0

Fees and other income                           66.4                    57.7
                                              ------                  ------
  Operating revenue                            294.4                   271.7
                                              ------                  ------

Salaries and general operating expenses        101.7                    99.9
Provision for credit losses                     22.5                    27.0
Depreciation on operating lease equipment       38.3                    32.1
Minority interest in subsidiary trust 
 holding solely debentures of the Company        4.8                     1.9
                                              ------                  ------
  Operating expenses                           167.3                   160.9
                                              ------                  ------
Income before provision for income taxes       127.1                   110.8

Provision for income taxes                      45.4                    40.7
                                              ------                  ------

  Net income                                  $ 81.7                  $ 70.1
                                              ======                  ======

Net income per basic share                    $ 0.50                   $0.45

Net income per diluted share                  $ 0.50                   $0.44

See accompanying notes to condensed consolidated financial statements.


                                      -3-
<PAGE>

                      THE CIT GROUP, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                              (Amounts in Millions)

                                                  Three Months Ended
                                                      March 31,
                                                -----------------------
                                                 1998            1997
                                                 ----            ----
                                                             (unaudited)

Balance, January 1                             $2,432.9        $2,075.4
Net income                                         81.7            70.1
Dividends declared                                (16.3)          (21.0)
Other                                               1.4             8.5
                                               --------        --------
Balance, March 31                              $2,499.7        $2,133.0
                                               ========        ========

See accompanying notes to condensed consolidated financial statements.


                                      -4-
<PAGE>

                      THE CIT GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (Amounts in Millions)

                                                          Three Months Ended
                                                               March 31,
                                                        ----------------------
                                                              (unaudited)
CASH FLOWS FROM OPERATIONS
Net income                                              $   81.7      $   70.1
Adjustments to reconcile net income to net
 cash flows from operations:
 Provision for credit losses                                22.5          27.0
 Depreciation and amortization                              44.3          37.3
 Provision (benefit) for deferred federal
   income taxes                                             11.2          (2.1)
 Gains on asset and receivable sales                       (21.3)        (20.0)
 Increase in accrued liabilities and payables               44.1           3.3
 Increase in other assets                                  (59.7)        (24.4)
 Other                                                       6.6          (0.5)
                                                        --------      --------
  Net cash flows provided by operations                    129.4          90.7
                                                        --------      --------
CASH FLOWS FROM INVESTING ACTIVITIES
Loans extended                                          (8,578.5)     (7,300.7)
Collections on loans                                     7,847.3       7,052.2
Purchases of assets to be leased                          (228.3)       (133.5)
Net increase in short-term factoring receivables          (161.7)       (149.2)
Proceeds from asset and receivable sales                    71.3          67.3
Proceeds from sales of assets received in
 satisfaction of loans                                      11.6           6.6
Purchases of investment securities                          (2.3)         (9.2)
Other                                                       (6.9)         (5.0)
                                                        --------      --------
  Net cash flows used for investing activities          (1,047.5)       (471.5)
                                                        --------      --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of variable and
 fixed rate notes                                        1,557.9         999.0
Repayments of variable and fixed rate notes               (761.5)     (1,036.3)
Net increase in commercial paper                           275.9         316.1
Repayments of nonrecourse leveraged lease debt             (52.4)        (53.2)
Proceeds from the issuance of company-obligated
 mandatorily redeemable preferred
 securities of subsidiary trust holding
 solely debentures of the Company                         --             250.0
Cash dividends paid                                       --             (21.0)
                                                        --------      --------
  Net cash flows provided by financing activities        1,019.9         454.6
                                                        --------      --------
Net increase in cash and cash equivalents                  101.8          73.8
Cash and cash equivalents, beginning of period             140.4         103.1
                                                        --------      --------
Cash and cash equivalents, end of period                $  242.2      $  176.9
                                                        ========      ========

Supplemental disclosures
Interest paid                                           $  192.0      $  208.8
Federal and state and local taxes paid                  $    4.6      $    2.0
Noncash transfers of finance receivables to                          
 assets received in satisfaction of loans               $   10.2      $    7.3
Noncash transfers of assets received in                              
 satisfaction of loans to finance receivables           $    --       $    4.6
                                                                     
See accompanying notes to condensed consolidated financial statements.


                                      -5-
<PAGE>

                      THE CIT GROUP, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1--Basis of Presentation

The Company  considers that all adjustments  (all of which are normal  recurring
accruals)  necessary for a fair  statement of financial  position and results of
operations  for these  periods  have been made;  however,  results  for  interim
periods are  subject to year-end  audit  adjustments.  Results for such  interim
periods are not necessarily indicative of results for a full year.

Note2--Earnings  Per Share 

The  reconciliation of the numerator and denominator of basic earnings per share
("EPS") with that of diluted EPS is presented below.

<TABLE>
<CAPTION>

                                                    For the Three Months Ended March 31,
                          ---------------------------------------------------------------------------------------
                                             1998                                          1997
                          -----------------------------------------    ------------------------------------------
                             Income         Shares        Per Share       Income         Shares         Per Share
                          (Numerator)   (Denominator)      Amount      (Numerator)   (Denominator)      Amount
                          -----------   -------------      --------    -----------   -------------      ---------
                                                            Dollars in Millions
                                                         (except per share amounts)

<S>                           <C>         <C>                <C>           <C>        <C>                <C>  
Basic EPS:
Income available to
 common shareholders          $81.7       162,225,000        $0.50         $70.1      157,500,000        $0.45
                                                             =====                                       =====
Effect of Dilutive
 Securities:
  Restricted shares             --            947,098                        --           948,527
  Stock options                 --            326,286                        --                --
                              -----       -----------                      -----      -----------
Diluted EPS                   $81.7       163,498,384        $0.50         $70.1      158,448,527        $0.44
                              =====       ===========        =====         =====      ===========        =====

</TABLE>

Note 3 - Recent Accounting Pronouncements

In 1997, the Financial  Accounting Standards Board (the "FASB") issued Statement
of Financial  Accounting  Standards ("SFAS") No. 130,  "Reporting  Comprehensive
Income". This statement does not change the reporting of net income. However, it
requires  that all items that are  required to be  recognized  under  accounting
standards  as  components  of  comprehensive  income be  reported  in a separate
financial  statement  that is  displayed  with  the  same  prominence  as  other
financial  statements.  This statement also requires that an enterprise  


                                      -6-
<PAGE>

display the accumulated  balance of other  comprehensive  income separately from
retained  earnings and  paid-in-capital  in the equity section of a statement of
financial  position.  The Company adopted this statement on January 1, 1998, but
does not have significant comprehensive income components to report at March 31,
1998.

In February 1998, the FASB issued SFAS No. 132,  "Employer's  Disclosures  about
Pensions and Other Post Retirement  Benefits".  SFAS No. 132 revises  employer's
disclosures  about pension and other post retirement  benefit plans but does not
change the measurement or recognition of those plans. The Statement standardizes
the  disclosure  requirements  to the extent  practicable,  requires  additional
information on changes in the benefit obligations and fair values of plan assets
that will facilitate financial analysis, and eliminates certain disclosures that
are no longer useful. SFAS No. 132 is effective for fiscal years beginning after
December 15, 1997.  The Company  will adopt this  standard in its 1998  year-end
financial statements.


                                      -7-
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

OVERVIEW

Net income for the first quarter of 1998 totaled $81.7  million,  an increase of
$11.6 million  (16.5%) from $70.1  million in the  comparable  1997 period.  The
improvement  resulted  from growth in revenues  from a higher level of financing
and leasing assets,  improvements in operating efficiency,  and lower net credit
losses. Return on average earning assets ("AEA") for the quarter ended March 31,
1998 increased to 1.71% compared with 1.60% for the same period of 1997.  Return
on equity for the first  quarter of 1998 was 13.2%  compared with 13.3% for 1997
due to the  additional  capital raised in connection  with the Company's  recent
initial public offering.

Financing and leasing  assets  totaled a record $21.1 billion at March 31, 1998,
an increase of 5.5% over $20.0  billion at December  31, 1997.  Managed  assets,
comprised  of financing  and leasing  assets and  consumer  finance  receivables
previously securitized and currently managed by the Company, increased 4.3% to a
record $23.3 billion at March 31, 1998, from $22.3 billion at December 31, 1997.

NET FINANCE INCOME

A comparison of 1998 and 1997 net finance income is set forth below.

                                           Three Months Ended
                           ----------------------------------------------------
                                     March 31,                   Increase
                           --------------------------      --------------------
                              1998            1997           Amount     Percent
                              ----            ----           ------     -------
                                        (Dollar Amounts in Millions)
Finance income             $   472.6       $    437.1      $   35.5       8.1%
Interest expense               244.6            223.1          21.5       9.6%
                           ---------       ----------      --------       ---
Net finance income         $   228.0       $    214.0      $   14.0       6.5%
                           =========       ==========      ========       ---
AEA                        $19,083.3       $ 17,590.1      $1,493.2       8.5%
                           =========       ==========      ========       ===
Net finance income                                                     
 as a % of AEA                 4.78%            4.87%
                               ====             ==== 


                                      -8-
<PAGE>

Finance income for the three months ended March 31, 1998 increased $35.5 million
or 8.1% to $472.6 million from $437.1 million in the comparable 1997 period.  As
a percentage of AEA,  finance  income  (excluding  interest  income  relating to
short-term  interest-bearing  deposits)  was 9.76% for the first quarter of 1998
and 9.87% for the comparable period of 1997.

Commercial  segment  finance  income as a percentage of commercial AEA was 9.84%
for the three months ended March 31, 1998 compared with 9.93% for the comparable
period during 1997.  The decline in the commercial  segment  finance income as a
percentage of commercial AEA reflects higher account termination payments during
1997 and an increased  level of municipal  equipment  leasing  activity in 1998,
which has a lower yield but a lower effective tax rate. Consumer segment finance
income as a  percentage  of consumer  AEA was 9.42% for the three  months  ended
March 31, 1998 compared with 9.52% for the  comparable  period during 1997.  The
decline in the consumer  segment  finance income as a percentage of consumer AEA
for the three  months ended March 31, 1998  reflects the sale of certain  higher
yielding high loan-to-value loans during the second quarter of 1997.

Interest  expense for the three  months  ended March 31,  1998  increased  $21.5
million or 9.6% to $244.6  million from $223.1  million in the  comparable  1997
period.  As a percentage of AEA,  interest expense  (excluding  interest expense
relating to  short-term  interest-bearing  deposits)  for the three months ended
March 31, 1998 decreased to 4.98% from 5.00% for the comparable period of 1997.


                                      -9-
<PAGE>

A  comparative  analysis  of the  weighted  average  principal  outstanding  and
interest rates paid on the Company's

debt for the three month periods ended March 31, 1998 and 1997, before and after
giving effect to interest rate swaps, is shown in the following tables.

<TABLE>
<CAPTION>

                                                                 Three Months Ended March 31, 1998
                                                     ----------------------------------------------------------
                                                          Before Swaps                        After Swaps
                                                     ---------------------              -----------------------  
                                                                   (Dollar Amounts in Millions)
<S>                                                  <C>             <C>                <C>               <C>  
Commercial paper and variable rate senior
 notes                                               $  8,520.7      5.66%              $  6,052.4        5.61%
Fixed rate senior and subordinated notes                7,056.5      6.41%                 9,524.8        6.48%
                                                     ----------                         ----------
Composite                                            $ 15,577.2      6.00%              $ 15,577.2        6.14%
                                                     ==========                         ==========

<CAPTION>

                                                                Three Months Ended March 31, 1997
                                                     ----------------------------------------------------------
                                                          Before Swaps                        After Swaps
                                                     ---------------------              -----------------------  
                                                                   (Dollar Amounts in Millions)
<S>                                                  <C>             <C>                <C>               <C>  
Commercial paper and variable rate senior
 notes                                               $  9,776.2      5.46%              $  6,258.9        5.38%
Fixed rate senior and subordinated notes                4,914.4      6.55%                 8,431.7        6.50%
                                                     ----------                         ----------
Composite                                            $ 14,690.6      5.82%              $ 14,690.6        6.02%
                                                     ==========                         ==========

</TABLE>

The Company's  interest  rate swaps  principally  convert  floating rate debt to
fixed  rate  debt.  The  Company  does  not  enter  into  derivative   financial
instruments for trading or speculative purposes.  The weighted average composite
rate  increased  from  6.00% to  6.14% in 1998 and from  5.82% to 6.02% in 1997,
primarily because a larger proportion of the Company's debt, after giving effect
to interest  rate swaps,  was subject to a fixed  rate.  However,  the  weighted
average  interest  rates  before swaps do not  necessarily  reflect the interest
expense that would have been incurred had the Company chosen to manage  interest
rate risk without the use of such swaps.


                                      -10-
<PAGE>

FEES AND OTHER INCOME

For the three months ended March 31, 1998,  fees and other income  totaled $66.4
million,  an increase of $8.7  million  over the  comparable  1997  period.  The
following table sets forth the components of fees and other income.

                                                   Three Months Ended March 31,
                                                --------------------------------
                                                 1998                      1997
                                                 ----                      ----
Dollars in Millions

Factoring commissions                           $23.0                      $21.2
Fees and other                                   22.1                       17.0
Gains on sales of leasing equipment              14.8                       11.4
Gains on sales of venture capital 
 investments                                      6.5                        7.7
Gains on securitizations and sales of 
 finance receivables                               --                        0.4
                                                -----                      -----
                                                $66.4                      $57.7
                                                =====                      =====

SALARIES AND GENERAL OPERATING EXPENSES

Salaries and general operating expenses increased $1.8 million or 1.8% to $101.7
million in the first quarter of 1998 from $99.9 million in the  comparable  1997
period as  management  continued to control  expenses and improve  productivity.
Salaries  and  employee  benefits  rose $1.7  million,  or 2.8%,  while  general
operating expenses were unchanged.

Management  monitors  productivity  via the analysis of the efficiency ratio and
the ratio of salaries and general  operating  expenses to average managed assets
("AMA"),  which is  comprised  of average  earning  assets  plus the  average of
consumer finance receivables previously securitized and currently managed by the
Company. The improvement in the ratios in the following table reflects


                                      -11-
<PAGE>

the ability of the  Company to  leverage  its  existing  infrastructure  and the
success of continuing productivity initiatives.

                                           Three Months Ended March 31,
                                      ---------------------------------------
                                           1998                     1997
                                      ----------------          -------------
Dollars in Millions
Efficiency ratio                           40.5%                   42.0%
Salaries and general operating 
 expenses as a percentage of AMA           1.90%                   2.10%

PROVISION AND RESERVE FOR CREDIT LOSSES/CREDIT QUALITY

The provision for credit losses for the first quarter of 1998 was $22.5 million,
down $4.5 million from $27.0 million for the first quarter of 1997. The decrease
was  primarily  the result of lower net  commercial  credit losses due to higher
1998  recoveries,  partially  offset  by  higher  consumer  net  credit  losses.
Comparative net credit loss experience is provided in the following table.

<TABLE>
<CAPTION>

                                                              Three Months Ended March 31,
                                     -------------------------------------------------------------------------------
                                                     1998                                     1997
                                     --------------------------------------  ---------------------------------------
                                       Total    Commercial     Consumer        Total     Commercial     Consumer
                                       -----    ----------     --------        -----     ----------     --------

<S>                                    <C>         <C>           <C>           <C>         <C>            <C> 
Dollars in Millions
Net credit losses                      $20.0       $9.3          $10.7         $25.7       $17.1          $8.6
Net credit losses as a
 percentage of average finance
 receivables,  excluding
 consumer finance receivables
 held for sale (annualized)            0.45%       0.27%         1.17%         0.60%       0.51%          0.97%

</TABLE>

As a percentage of average  consumer managed finance  receivables,  consumer net
credit losses were 0.90% during the first quarter of 1998 compared with 0.94% in
1997.

The consolidated reserve for credit losses increased to $240.2 million (1.33% of
finance  receivables)  at March 31, 1998 from $235.6  million  (1.33% of finance
receivables)  at 


                                      -12-
<PAGE>

December 31, 1997.  The ratio of the  consolidated  reserve for credit losses to
trailing  twelve-month net credit losses improved to 2.5 times at March 31, 1998
from 2.3 times at December 31, 1997.

Past Due And Nonperforming Assets

The  following  table sets forth  certain  information  concerning  past due and
nonperforming  assets (and the related  percentages of finance  receivables)  at
March 31, 1998 and December 31, 1997.

                                  At March 31, 1998       At December 31, 1997
                               ----------------------    -----------------------
Dollars in Millions
Finance receivables, 
 past due 60 days
 or more
  Commercial                     $182.1         1.27%     $168.9         1.20%
  Consumer                        122.3         3.28%      127.7         3.48%
                                 ------         ----      ------         ----
    Total                        $304.4         1.68%     $296.6         1.67%
                                 ======         ----      ======         ====
Nonperforming assets
  Commercial                     $137.9         0.96%     $105.5         0.75%
  Consumer                        107.4         2.88%      101.9         2.78%
                                 ------         ----      ------         ----
    Total                        $245.3         1.35%     $207.4         1.17%
                                 ======         ====      ======         ====

Nonperforming assets reflect both commercial and consumer finance receivables on
nonaccrual status and assets received in satisfaction of loans.

OPERATING LEASE EQUIPMENT

The operating lease  equipment  portfolio was $2.1 billion at March 31, 1998, up
7.8% from  December 31, 1997 and up 36.8% from March 31, 1997.  Depreciation  on
operating  lease  equipment  for the first  quarter of 1998 was $38.3 million up
from $32.1 million for the same period in 1997.


                                      -13-
<PAGE>

From time to time,  financial or operational  difficulties  may adversely affect
future payments to the Company relating to operating lease  equipment.  At March
31, 1998, operators of certain aircraft assets and operations at an oil refinery
were subject to such difficulties.  The approximate  aggregate carrying value of
these assets was $56.3 million.  The Company does not believe these difficulties
will have a material effect on its consolidated financial position or results of
operations.

INCOME TAXES

The effective  income tax rates for the 1998 and 1997 first  quarters were 35.7%
and 36.7%,  respectively.  The decrease in the  effective tax rate for the three
months ended March 31, 1998 is a result of lower state and local income taxes.


                                      -14-
<PAGE>

FINANCING AND LEASING ASSETS

Managed  assets grew  $950.5  million  (4.3%) to $23.3  billion.  Financing  and
leasing assets increased $1.1 billion,  or 5.5%, to $21.1 billion,  as presented
in the following table.
                                      
                                              At De-            Change
                              At March 31,  cember 31,   --------------------
                                 1998          1997       Amount        Percent 
                                 ----          ----       ------        -------
                                       (Dollar Amounts in Millions)
Commercial
Equipment Financing and 
  Leasing 
  Finance receivables
  Capital Finance             $ 2,293.0      $ 2,400.7      $ (107.7)     (4.5)%
  Equipment Financing           7,559.6        7,403.4         156.2       2.1
                              ---------      ---------      --------      ----
                                9,852.6        9,804.1          48.5       0.5
                              ---------      ---------      --------      ----
Operating lease                                                         
  equipment, net                                                        
  Capital Finance               1,450.3        1,281.8         168.5      13.1
  Equipment Financing             603.9          623.8         (19.9)     (3.2)
                              ---------      ---------      --------      ----
                                2,054.2        1,905.6         148.6       7.8
                              ---------      ---------      --------      ----
Total Equipment Financing                                               
  and Leasing                  11,906.8       11,709.7         197.1       1.7
                              ---------      ---------      --------      ----
Factoring                                                               
  Commercial Services           2,312.4        2,113.1         199.3       9.4
                              ---------      ---------      --------      ----
Commercial Finance                                                      
  Business Credit               1,298.2        1,247.9          50.3       4.0
  Credit Finance                  903.8          889.8          14.0       1.6
                              ---------      ---------      --------      ----
Total Commercial Finance        2,202.0        2,137.7          64.3       3.0
                              ---------      ---------      --------      ----
Other                                                                   
  Equity Investments               63.3           65.8          (2.5)     (3.8)
                              ---------      ---------      --------      ----
  Total commercial             16,484.5       16,026.3         458.2       2.9
                              ---------      ---------      --------      ----
Consumer                                                                
Consumer Finance                2,284.9        1,992.3         292.6      14.7
Sales Financing                 2,294.4        1,940.7         353.7      18.2
                              ---------      ---------      --------      ----
  Total consumer                4,579.3        3,933.0         646.3      16.4
                              ---------      ---------      --------      ----
  Total financing and                                                   
     leasing assets            21,063.8       19,959.3       1,104.5       5.5
                              ---------      ---------      --------      ----
Consumer finance receivables                                            
 previously securitized and                                             
 currently managed by                                                   
 the Company                                                            
Consumer Finance                  419.6          453.8         (34.2)     (7.5)
Sales Financing                 1,812.0        1,931.8        (119.8)     (6.2)
                              ---------      ---------      --------      ----
                                2,231.6        2,385.6        (154.0)     (6.5)
                              ---------      ---------      --------      ----
Total managed assets          $23,295.4      $22,344.9      $  950.5       4.3%
                              =========      =========      ========       === 
                                                                      
Total  commercial  financing and leasing assets increased 2.9% from December 31,
1997 as a result of a rise in factoring  receivables and growth in the operating
lease  portfolio.  Growth in factoring  receivables  was  favorably  impacted by
higher  seasonal  sales and client  borrowings,  as well as strong new  business
signings.  Growth  in  the  operating  lease  portfolio  occurred  primarily  in


                                      -15-
<PAGE>

commercial  aircraft and railcars.  These increases were partially offset by the
continued  high level of paydowns  in the  commercial  financing  sector and the
continued  liquidation of the oceangoing  maritime and power generation  project
portfolios.  Consumer managed assets increased to $6.8 billion at March 31, 1998
from $6.3 billion at December 31, 1997, up 7.8%.  The consumer  increase was the
result of strong originations,  particularly in recreational boat and recreation
vehicle products.

Financing and Leasing Assets Composition

The Company's ten largest financing and leasing asset accounts at March 31, 1998
in the aggregate  represented  4.3% of the Company's total financing and leasing
assets.  All ten of such  accounts  are  commercial  accounts and are secured by
equipment, accounts receivable or inventory.

Geographic Composition

The following table presents financing and leasing assets by customer location.

<TABLE>
<CAPTION>
                                       At March 31,1998                At December 31, 1997
                                -------------------------------   -----------------------------
                                    Amount        Percent              Amount         Percent
                                    ------        -------              ------         -------
<S>                              <C>              <C>               <C>             <C>  
Dollars in Millions 
United States
  West                           $  4,925.7        23.4%            $ 4,642.1        23.3%
  Northeast                         4,822.1        22.9               4,501.9        22.6
  Midwest                           4,472.8        21.2               4,290.0        21.5
  Southeast                         2,978.9        14.1               2,802.9        14.0
  Southwest                         2,475.1        11.8               2,360.7        11.8
Foreign (principally
  commercial aircraft)              1,389.2         6.6               1,361.7         6.8
                                 ----------       -----             ---------       -----
  Total                          $ 21,063.8       100.0%            $19,959.3       100.0%
                                 ==========       =====             =========       =====
</TABLE>

The Company's managed asset geographic  diversity does not differ  significantly
from its owned asset geographic diversity.


                                      -16-
<PAGE>

The Company's  financing and leasing asset portfolio is diversified by state. At
March 31, 1998, with the exception of California  (12.3%),  New York (8.3%), and
Texas  (7.7%),  no state  represented  more than 5.0% of  financing  and leasing
assets.

Industry Composition

The following  table  presents  financing and leasing  assets by major  industry
class.

<TABLE>
<CAPTION>
                                                  At March 31, 1998        At December 31, 1997
                                              -----------------------     -----------------------
                                               Amount         Percent      Amount        Percent
                                               ------         -------      ------        -------
<S>                                          <C>              <C>          <C>             <C>     
Dollars in Millions
Manufacturing(1)(none greater than 4.5%)     $ 4,538.3        21.5%        $ 4,440.4       22.2%   
Home mortgage(2)                               2,284.9        10.8           1,992.3       10.0
Commercial airlines(3)                         2,153.1        10.2           2,077.6       10.4
Retail                                         1,922.6         9.1           1,807.5        9.1
Construction equipment                         1,850.9         8.8           1,791.4        9.0
Transportation(4)                              1,390.0         6.6           1,283.7        6.4
Manufactured housing(5)                        1,158.1         5.5           1,125.7        5.6
Other (none greater than 3.4%)(6)              5,765.9        27.5           5,440.7       27.3
                                             ---------       -----         ---------      -----
Total                                        $21,063.8       100.0%        $19,959.3      100.0%
                                             =========       =====         =========      ===== 
</TABLE>

(1)  Includes  manufacturers of steel and metal products,  textiles and apparel,
     printing and paper products and other industries.

(2)  On a managed asset basis,  home mortgage  outstandings were $2.7 billion or
     11.6% of managed  assets at March 31, 1998 as compared with $2.4 billion or
     10.9% at December 31, 1997.

(3)  See  "--Concentrations"  below for a discussion of the  commercial  airline
     portfolio.  

(4)  Includes  rail,  bus, and  over-the-road  trucking  industries and business
     aircraft.

(5)  On a managed  asset  basis,  manufactured  housing  outstandings  were $1.5
     billion or 6.4% of managed  assets at March 31,  1998 as  compared  to $1.5
     billion or 6.5% at December 31, 1997.

(6)  On a managed asset basis, recreation vehicle outstandings were $1.7 billion
     or 7.1% of managed  assets at March 31, 1998 as compared to $1.6 billion or
     7.2% at December 31, 1997.  On a managed  asset  basis,  recreational  boat
     outstandings  were  $799.8  million or 3.4% of managed  assets at March 31,
     1998 as  compared to $682.5  million or 3.1% of managed  assets at December
     31, 1997.

Concentrations

Commercial Airline Industry

Commercial airline financing and leasing assets totaled $2.2 billion or 10.2% of
total  financing  and leasing  assets at March 31,  1998,  up slightly  from the
December  31,  1997  balance  of $2.1  billion.  


                                      -17-
<PAGE>

The portfolio is secured by  commercial  aircraft and related  equipment.  Given
current improved industry  performance,  the Company has determined to grow this
portfolio,  but will continue to monitor the size of the  portfolio  relative to
the Company's total financing and leasing assets.

The following table presents  information about the commercial  airline industry
portfolio. See also "Operating Lease Equipment".

                                              At March 31,       At December 31,
                                                1998                 1997
                                                ----                 ----
                                               (Dollar Amounts in Millions)
Finance Receivables
  Amount outstanding(1)                        $1,213.2            $1,254.9
  Number of obligors                                 51                  54
                                                                  
Operating Lease Equipment, net                                    
                                                                  
  Net carrying value                              939.9               822.7
  Number of obligors                                 32                  33
                                                                  
Total                                           2,153.1             2,077.6
Number of obligors(2)                                67                  67
Number of aircraft(3)                               218                 225
                                                                
(1)  Includes  accrued rents on operating  leases that are classified as finance
     receivables in the Company's Consolidated Balance Sheets.

(2)  Certain  obligors are obligors under both finance  receivable and operating
     lease transactions.

(3)  Regulations  established by the Federal Aviation Administration (the "FAA")
     limit  the  maximum  permitted  noise an  aircraft  may  make.  A Stage III
     aircraft meets a more restrictive  noise level  requirement than a Stage II
     aircraft.  The FAA has  issued  rules  that  phase  out the use of Stage II
     aircraft  in the United  States  through the year 2000.  The  International
     Civil Aviation  Organization has issued similar requirements for Europe. At
     March 31, 1998,  the portfolio  consisted of Stage III aircraft of $2,019.9
     million  (93.8%)  and Stage II aircraft of $102.1  million  (4.8%),  versus
     Stage III  aircraft  of $1,933.5  million  (93.1%) and Stage II aircraft of
     $115.7 million (5.6%) at year-end 1997.

Foreign Outstandings

Financing and leasing  assets to foreign  obligors,  primarily to the commercial
airline  industry,  are all U.S. dollar  denominated and totaled $1.4 billion at
both  March  31,  1998  and  December  31,  1997.   The  foreign   exposure  was
geographically  dispersed,  with no individual  country  representing  more than
0.75% of financing and leasing assets.


                                      -18-
<PAGE>

LIQUIDITY

The Company  manages  liquidity  risk by monitoring  the relative  maturities of
assets and liabilities and by borrowing funds,  primarily in the U. S. money and
capital  markets.  Such cash is used to fund asset  growth  (including  the bulk
purchase of finance  receivables  and the  acquisition of other  finance-related
businesses) and to meet debt  obligations and other  commitments on a timely and
cost-effective  basis.  The  primary  sources of funding  are  commercial  paper
borrowings,  medium-term  notes,  other term debt  securities  and  asset-backed
securitizations.

Commercial  paper  outstanding  increased  $275.9  million  from $5.6 billion at
December 31, 1997 to $5.8 billion. During the first quarter of 1998, the Company
issued $0.9 billion of prime-based  variable-rate  term debt and $0.7 billion of
fixed-rate debt, whereas repayments of term debt totaled $0.8 billion.  At March
31, 1998, $4.9 billion of registered,  but unissued,  debt  securities  remained
available under shelf registration statements.

At March 31, 1998, commercial paper borrowings were supported by $5.0 billion of
committed revolving credit-line facilities.  At March 31, 1998, such credit-line
facilities represented 88% of operating commercial paper outstanding (commercial
paper  outstanding  less  interest-bearing  deposits),  as compared  with 91% at
December 31, 1997.  No borrowings  have been made under credit lines  supporting
commercial paper since 1970.

Periodically,   the  Company  accesses  the  public  and  private   asset-backed
securitization  markets as an additional  liquidity  source.  At March 31, 1998,
$2.7 billion of registered,  but unissued,  securities relating to the Company's
asset-backed  securitization program remained available under shelf registration
statements.  The Company did not access the  securitization  markets  during the
first quarter of 1998.


                                      -19-
<PAGE>

CAPITALIZATION

The  following  table  presents  information  regarding  the  Company's  capital
structure.

                                             March 31,              December 31,
                                               1998                     1997
                                             --------               -----------
                                                   (Dollars in Millions)

Commercial paper                           $  5,835.5               $  5,559.6
Term debt                                    10,551.7                  9,755.3
                                           ----------               ----------
Total debt                                   16,387.2                 15,314.9
Company-obligated mandatorily 
  redeemable preferred
  securities of subsidiary 
  trust holding solely 
  debentures of the Company                     250.0                    250.0
Stockholders' equity                          2,499.7                  2,432.9
                                           ----------               ----------
Total capitalization                       $ 19,136.9               $ 17,997.8
                                           ==========               ==========
Total debt to stockholders' 
  equity and Company-
  obligated mandatorily 
  redeemable preferred 
  securities of subsidiary 
  trust holding solely 
  debentures of the Company                      5.96x                    5.71x
Total debt and Company-obligated 
  mandatorily redeemable
  preferred securities of 
  subsidiary trust holding 
  solely debentures of the 
  Company to stockholders' 
  equity                                         6.66x                    6.40x


                                      -20-
<PAGE>

STATISTICAL DATA

The following  table  presents  components of net income as a percentage of AEA,
along with other selected financial data.

                                                           Three Months Ended
                                                                March 31,
                                                          ---------------------
                                                            1998         1997
                                                            ----         ----

Finance income*                                              9.76%         9.87%
Interest expense*                                            4.98          5.00
                                                             ----          ---- 
  Net finance income                                         4.78          4.87
Fees and other income                                        1.39          1.31
                                                             ----          ---- 
  Operating revenue                                          6.17          6.18
                                                             ----          ---- 
Salaries and general operating expenses                      2.14          2.27
Provision for credit losses                                  0.47          0.61
Depreciation on operating lease equipment                    0.80          0.73
Minority interest in subsidiary trust holding solely
 debentures of the company                                   0.10          0.04
                                                             ----          ---- 
  Operating expenses                                         3.51          3.65
                                                             ----          ---- 
Income before provision for income taxes                     2.66          2.53
Provision for income taxes                                   0.95          0.93
                                                             ----          ---- 
  Net income                                                 1.71%         1.60%
                                                             ====          ====
Average earning assets (in millions)                    $19,083.3     $17,590.1
                                                        =========    ==========

*Excludes   interest  income  and  interest   expense   relating  to  short-term
interest-bearing deposits.


                                      -21-
<PAGE>

                           PART II. OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

         (a)  Exhibit 12 - Computation of Ratios of Earnings to Fixed Charges.

         (b)  Exhibit 27 - Financial Data Schedule

         (c)  A Form 8-K  report  dated  January  15,  1998 was  filed  with the
              Commission  reporting amendments to certain items of the Company's
              1996 Form 10-K.

         (d)  A Form 8-K  report  dated  January  28,  1998 was  filed  with the
              Commission  reporting  the  Company's  announcement  of  financial
              results for the quarter and year ended December 31, 1997.

         (e)  A Form  8-K  report  dated  March  24,  1998  was  filed  with the
              Commission  reporting the Company's  declaration of a dividend for
              the  quarter  ended  March  31,  1998  and the  election  of a new
              director.


                                      -22-
<PAGE>

                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                                 The CIT Group, Inc.
                                                 (Registrant)

                                              BY /s/ J. M. Leone
                                                 -----------------------------
                                                 J. M. Leone
                                                 Executive Vice President and
                                                 Chief Financial Officer
                                                 (duly authorized and principal
                                                 accounting officer)

DATE:  May 5, 1998