<PAGE>
 
                                FINANCIAL REVIEW
                                 AND FORM 10-Q

                                 SECOND QUARTER
                                      1998
                                                        CITICORP [LOGO](R)
<PAGE>
 
                                                              CITICORP [LOGO](R)

TABLE OF CONTENTS                                                        PAGE
FINANCIAL SUMMARY                                                          1
BUSINESS DISCUSSION                                                        4 
  Earnings by Global Business Area                                         4
  Global Consumer                                                          5
    Citibanking                                                            6
    Cards                                                                  7
    Private Bank                                                           9
    Global Consumer in Emerging Markets                                   10
    Global Consumer in Developed Markets                                  11
    Consumer Portfolio Review                                             11
  Global Corporate Banking                                                14
    Emerging Markets                                                      15
    Global Relationship Banking                                           17
  Corporate Items                                                         18
MANAGING GLOBAL RISK                                                      18
  Liquidity                                                               18
  Management of Price Risk Exposure                                       19
  Management of Cross-Border Risk                                         22
  Estimated Fair Value of Financial Instruments                           24
  Capital                                                                 25
STATEMENT OF INCOME ANALYSIS                                              28
  Net Interest Revenue (Taxable Equivalent Basis)                         28
  Fee and Commission Revenue                                              29
  Trading-Related Revenue                                                 30
  Securities Transactions                                                 31
  Other Revenue                                                           31
  Provision and Credit Loss Reserves                                      32
  Operating Expense                                                       33
  Restructuring Expense                                                   34
  Income Taxes                                                            35
  Effect of Credit Card Securitization Activity                           35
  Future Impact of Recently Issued Accounting Standards                   36
CONSOLIDATED FINANCIAL STATEMENTS                                         37
  Consolidated Statement of Income                                        37
  Consolidated Balance Sheet                                              38
  Consolidated Statement of Changes in Stockholders' Equity               39
  Consolidated Statement of Cash Flows                                    40
  Consolidated Balance Sheet  --  CITIBANK, N.A. and Subsidiaries         41
OTHER FINANCIAL INFORMATION                                               42
  Securities                                                              42
  Trading Account Assets and Liabilities                                  42
  Trading and End-User Derivative and Foreign Exchange Contracts          43
  Cash-Basis, Renegotiated, and Past Due Loans                            45
  Other Real Estate Owned (OREO) and Assets Pending Disposition           45
  Details of Credit Loss Experience                                       46
  Calculation of Earnings Per Share                                       47
  Average Balances and Interest Rates (Taxable Equivalent Basis)  --  
   Quarterly                                                              48
  Average Balances and Interest Rates (Taxable Equivalent Basis)  --  
   Six Months                                                             49
FORM 10-Q                                                                 50
  FORM 10-Q CROSS-REFERENCE INDEX                                         51
SIGNATURES                                                                54
<PAGE>
 
                                                              CITICORP [LOGO](R)

-------------------------------------------------------------------------------
FINANCIAL SUMMARY
-------------------------------------------------------------------------------
<TABLE> 
<CAPTION>  
                                                                              SECOND QUARTER          SIX MONTHS
                                                                             1998       1997        1998       1997
---------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>        <C>        <C>        <C>        <C>         <C>
NET INCOME (In Millions of Dollars)................                         $ 1,097    $ 1,024      $2,162     $2,019
---------------------------------------------------------------------------------------------------------------------
NET INCOME PER SHARE (A)
Basic..............................................                         $  2.37    $  2.16      $ 4.65      $4.23
Diluted............................................                            2.30       2.10        4.53       4.11
COMMON STOCKHOLDERS' EQUITY PER SHARE..............                           45.23      42.58           -          -
CLOSING STOCK PRICE AT QUARTER END.................                          149.25     120.56           -          -
DIVIDENDS DECLARED PER COMMON SHARE................                           0.575      0.525        1.15       1.05
 
 
FINANCIAL RATIOS
Return on Assets...................................                            1.35%      1.40%       1.36%      1.41%
Return on Common Stockholders' Equity..............                           21.51%     20.97%      21.62%     20.87%
Return on Total Stockholders' Equity...............                           20.46%     19.72%      20.51%     19.58%
 
 
---------------------------------------------------------------------------------------------------------------------
                                                                JUNE 30,   Mar. 31,   Dec. 31,   Sept. 30,   June 30,
CAPITAL (Dollars in Billions) (see page 25)                         1998       1998       1997        1997       1997
---------------------------------------------------------------------------------------------------------------------
Tier 1.............................................               $ 21.9    $  21.3    $  21.1      $ 20.7      $20.6
Total (Tier 1 and 2)...............................                 31.8       31.2       31.2        30.4       30.1
Tier 1 Ratio.......................................                 8.29%      8.26%      8.34%       8.25%      8.18%
Total Ratio (Tier 1 and 2).........................                12.05%     12.13%     12.31%      12.16%     11.96%
Leverage Ratio.....................................                 6.73%      6.83%      7.01%       7.14%      7.30%
Common Equity as a Percentage of Total Assets......                 6.18%      6.01%      6.21%       6.53%      6.41%
Total Equity as a Percentage of Total Assets.......                 6.57%      6.50%      6.82%       7.16%      7.04%
---------------------------------------------------------------------------------------------------------------------
 
                                                     2ND QTR.   1st Qtr.   4th Qtr.   3rd Qtr.     2nd Qtr.   1st Qtr.
EARNINGS ANALYSIS (In Millions of Dollars)               1998       1998       1997       1997        1997       1997
---------------------------------------------------------------------------------------------------------------------
Total Revenue......................................    $6,202     $5,605    $ 5,568    $ 5,541      $5,311     $5,196
Effect of Credit Card Securitization Activity......       579        461        434        408         437        434
Net Cost To Carry (B)..............................        11         (1)         4         (5)         (1)        (3)
                                                   ------------------------------------------------------------------
ADJUSTED REVENUE...................................     6,792      6,065      6,006      5,944       5,747      5,627
                                                   ------------------------------------------------------------------
Total Operating Expense............................     3,883      3,394      3,408      4,237       3,173      3,169
Net OREO Benefits (C)..............................         2         12          9         16          37         10
Restructuring Charge...............................         -          -          -       (889)          -          -
                                                   ------------------------------------------------------------------
 
ADJUSTED OPERATING EXPENSE.........................     3,885      3,406      3,417      3,364       3,210      3,179
                                                   ------------------------------------------------------------------
OPERATING MARGIN...................................     2,907      2,659      2,589      2,580       2,537      2,448
                                                   ------------------------------------------------------------------
Global Consumer Net Write-Offs.....................       510        426        432        452         488        459
Effect of Credit Card Securitization Activity......       579        461        434        408         437        434
Net Cost to Carry and Net
  OREO (Benefits) Costs (B) (C)....................        (3)        (1)         -         (4)         (3)         1
                                                   ------------------------------------------------------------------
GLOBAL CONSUMER CREDIT COSTS.......................     1,086        886        866        856         922        894
                                                   ------------------------------------------------------------------
Global Corporate Banking
  Net Write-Offs (Recoveries)......................        29         56         29          9          (1)       (61)
Net Cost to Carry and Net
  OREO Costs (Benefits) (B) (C)....................        12        (12)        (5)       (17)        (35)       (14)
                                                   ------------------------------------------------------------------
GLOBAL CORPORATE BANKING
  CREDIT COSTS (BENEFITS)..........................        41         44         24         (8)        (36)       (75)
                                                   ------------------------------------------------------------------
 
OPERATING MARGIN LESS CREDIT COSTS.................     1,780      1,729      1,699      1,732       1,651      1,629
Additional Provision (D)...........................        25         25         25         25          25         25
Restructuring Charge...............................         -          -          -        889           -          -
                                                   ------------------------------------------------------------------
INCOME BEFORE TAXES................................     1,755      1,704      1,674        818       1,626      1,604
Income Taxes.......................................       658        639        613        307         602        609
                                                   ------------------------------------------------------------------
NET INCOME.........................................    $1,097     $1,065    $ 1,061    $   511      $1,024     $  995
---------------------------------------------------------------------------------------------------------------------
</TABLE>

(A)  Based on net income less preferred stock dividends.  See page 47 for
     details.
(B)  Includes the net cost to carry cash-basis loans and other real estate owned
     ("OREO").
(C)  Includes gains and losses on sales, direct revenue and expense, and
     writedowns of OREO.
(D)  Represents amounts in excess of net write-offs.  See page 32 for
     discussion.

                                                                               1
<PAGE>
 
                                                              CITICORP [LOGO](R)

Citicorp reported net income for the 1998 second quarter of $1.1 billion or
$2.30 per diluted common share, up 7% and 10% from the 1997 second quarter.
Growth in income before taxes was led by U.S. bankcards (excluding the results
of Universal Card Services ("UCS") purchased from AT&T on April 2, 1998), Global
Relationship Banking, and Citibanking in North America, along with a benefit
from Corporate investment portfolio gains, partially offset by weaker earnings
in the Consumer emerging markets businesses, largely due to conditions in Asia
Pacific.  Net income for the 1998 six months was $2.2 billion or $4.53 per
diluted common share, up 7% and 10% from the 1997 six months.  Return on common
equity was 21.5% in the quarter and 21.6% in the six months, compared with 21.0%
and 20.9% for the 1997 periods, and return on average assets was 1.35% and 1.36%
for the 1998 periods, compared with 1.40% and 1.41% for 1997.

Global Consumer income before taxes declined $67 million or 11% and $131 million
or 10% in the quarterly and six-month comparisons, reflecting improved results
in U.S. bankcards and the Citibanking businesses in North America, Japan, and
Europe, more than offset by UCS acquisition premium costs and lower earnings in
Asia Pacific and Latin America.  Global Corporate Banking income before taxes
grew $112 million or 14% and $212 million or 13% in the quarterly and six-month
comparisons, largely attributable to Global Relationship Banking.  Global
Consumer income before taxes in Asia Pacific declined $70 million and $138
million in the quarterly and six-month comparisons primarily reflecting lower
revenue and higher credit costs while Global Corporate Banking income before
taxes was up $3 million in the quarter, as increased revenue was partially
offset by higher expense and credit costs but was down $13 million in the six
months as higher expense and credit costs more than offset revenue growth.

Adjusted revenue grew $1.0 billion or 18% and $1.5 billion or 13% in the
quarterly and six-month comparisons.  Global Consumer revenue was up 14% and 7%
from the 1997 quarter and six months reflecting the inclusion of UCS ($336
million), improvements in U.S. bankcards and in Citibanking in the developed
markets, partially offset by declines in Asia Pacific and in the Cards business
in Latin America.  Global Corporate Banking revenue grew 21% and 20% in the 
quarterly and six month comparisons reflecting improved trading-related
revenue, higher aggregate securities transactions and net asset gains, growth in
transaction banking services and corporate finance revenue, improved treasury
results and, in the six-month period, higher venture capital revenue.  Foreign
currency translation reduced Citicorp revenue growth by approximately 4 and 5
percentage points in the respective 1998 periods.

Adjusted net interest revenue (taxable equivalent basis) was up $463 million or
13% and $510 million or 7% from the 1997 quarter and six months, primarily
reflecting the contribution of UCS.  Adjusted fee and commission revenue was up
$157 million or 11% and $236 million or 9% in the quarterly and six-month
comparisons, led by growth in U.S. bankcards, including the addition of UCS,
partially offset by reduced revenue from Cards in Asia Pacific.  Trading-related
revenue (including related net interest revenue) increased $219 million and $358
million from the 1997 quarter and six months, primarily reflecting improved
foreign exchange results in Asia Pacific.  Combined net asset gains and
securities transactions grew $310 million and $382 million in the quarterly and
six-month comparisons, primarily reflecting gains on the sale of Brady bonds and
real estate-related equity interests.  Venture capital revenue was essentially
unchanged in the quarterly comparison but grew $169 million in the six months.

Adjusted operating expense grew $675 million or 21% ($448 million or 14%
excluding UCS) and $902 million or 14% ($675 million or 11% excluding UCS) from
the 1997 quarter and six months, reflecting preparations for the Year 2000 and
the European Economic and Monetary Union ("EMU"), advertising and marketing
programs, electronic banking initiatives, higher incentive compensation, volume-
driven business growth, and continued franchise and product development efforts.
Expense increased 26% and 17% in the developed markets in the quarterly and six-
month comparisons and 7% in both 1998 periods in the emerging markets.  Foreign
currency translation reduced expense growth by approximately 4 percentage points
in each 1998 period.

Operating margin grew $370 million or 15% and $581 million or 12% in the
quarterly and six-month comparisons.  The incremental revenue to expense ratio
was 1.5 to 1 for the quarter and 1.6 to 1 for the six months, and the efficiency
ratio (adjusted operating expense as a percentage of adjusted revenue) was 57%
for both 1998 periods, up slightly from 56% for both 1997 periods.

Global Consumer credit costs were $1.1 billion ($910 million excluding UCS) in
the quarter, compared with $886 million in the 1998 first quarter and $922
million a year ago, reflecting ratios of net credit losses to average managed
loans of 

2
<PAGE>
 
                                                              CITICORP [LOGO](R)

2.88% (2.66% excluding UCS), 2.64%, and 2.73% in the respective quarters. The
managed consumer loan delinquency ratio (90 days or more past due) was 2.19%
(2.29% excluding UCS), compared with 2.37% and 2.43% at the end of the preceding
and year-ago quarters. Commercial credit costs rose $77 million and $196 million
in the quarterly and six-month comparisons primarily due to higher write-offs in
Asia Pacific, coupled with lower gains from the sale of OREO and, in the six-
month comparison, a $50 million recovery in 1997 from the refinancing agreement
concluded with Peru. Commercial cash-basis loans and OREO of $1.6 billion at
June 30, 1998 were down $53 million or 3% from the preceding quarter and were up
$242 million or 17% from a year ago, principally reflecting increases in
Indonesia and Thailand, and improvements in real estate in Global Relationship
Banking. At June 30, 1998, total credit loss reserves were $6.3 billion,
reflecting the addition of $320 million of credit loss reserves related to the
acquisition of UCS. Global Consumer continued to build its allowance for credit
losses, adding $25 million in the quarter and $50 million in the six months
above net credit losses, primarily related to Cards in both the developed and
emerging markets.

Citicorp's effective tax rate was 37.5% in both 1998 periods and in the 1997 six
months, and was 37% in the 1997 second quarter.  Income taxes are attributed to
core businesses on the basis of local tax rates, which resulted in effective tax
rates for the core businesses of 31% and 28% in the 1998 quarter and six months,
and 23% and 25% in the 1997 periods.

Total capital (Tier 1 and Tier 2) was $31.8 billion or 12.05% of net risk-
adjusted assets, and Tier 1 capital was $21.9 billion or 8.29% at June 30, 1998.
During the quarter, Citicorp generated $616 million of Tier 1 capital, a
substantial portion of which was used to fund the growth in risk-adjusted assets
resulting from the acquisition of UCS.  For the six months, Citicorp generated
$366 million of free capital.  During the quarter, no shares were repurchased
due to the suspension of the stock repurchase program in connection with the
announced agreement to merge with Travelers Group.  Total repurchases since the
program was inaugurated on June 20, 1995 were 82.0 million shares for an outlay
of $7.3 billion.

On April 5, 1998, Citicorp and Travelers Group Inc. agreed to combine in a
merger of equals, with the shareholders of each company owning approximately 50%
of the outstanding common stock of the combined company after the merger.  On
July 22, 1998, a majority of the stockholders of Citicorp and Travelers approved
the merger.  Consummation of the merger remains subject to customary closing
conditions, including the approval of the Federal Reserve Board.  Citicorp and
Travelers expect to complete the merger during the 1998 third quarter.

Citicorp and Travelers Group Inc. unaudited pro forma condensed combined
financial statements as of June 30, 1998, and for the three and six months ended
June 30, 1998 and 1997 are filed as an exhibit to this Form 10-Q.

The consolidated financial statements of Travelers included in Travelers'
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998, as filed or
to be filed with the SEC pursuant to the Securities Exchange Act of 1934, as
amended, is incorporated as of the filing date of such report in this Financial
Review and Form 10-Q by reference.  Such report and other documents filed by
Travelers may be read and copied at the public reference rooms maintained by the
SEC in  New York, Chicago, and Washington, D.C.  (Travelers' public filings are
also available from commercial document retrieval services and at the Internet
World Wide Web site maintained by the SEC at "http://www.sec.gov.")

                                                                               3
<PAGE>
 
                                                              CITICORP [LOGO](R)

-------------------------------------------------------------------------------
BUSINESS DISCUSSION
-------------------------------------------------------------------------------

The table below and the discussions that follow analyze Citicorp's results by
global business areas including its Global Consumer and Global Corporate Banking
core business franchises.


<TABLE>
<CAPTION>
EARNINGS BY GLOBAL BUSINESS AREA
----------------------------------------------------------------------------------------------------------
 
                                                       SECOND QUARTER      %        SIX MONTHS         %
                                                    -----------------         -------------------
(In Millions of Dollars)                               1998   1997 (A)  Change    1998    1997 (A)  Change
----------------------------------------------------------------------------------------------------------
 
<S>                                                   <C>     <C>       <C>      <C>      <C>       <C>
Global Consumer.....................................  $  377   $  459      (18)  $  806    $  936      (14)
Global Corporate Banking............................     662      663        -    1,411     1,312        8
                                                    -----------------         -------------------
CORE BUSINESSES.....................................   1,039    1,122       (7)   2,217     2,248       (1)
Corporate Items.....................................      58      (98)       NM     (55)     (229)      76
                                                    -----------------         -------------------
TOTAL CITICORP......................................  $1,097   $1,024        7   $2,162    $2,019        7
----------------------------------------------------------------------------------------------------------
 
SUPPLEMENTAL INFORMATION
 
GLOBAL CONSUMER
Citibanking.........................................  $  155   $  194      (20)  $  335    $  371      (10)
Cards...............................................     146      186      (22)     322       406      (21)
Private Bank........................................      76       79       (4)     149       159       (6)
                                                    -----------------         -------------------
TOTAL...............................................  $  377   $  459      (18)  $  806    $  936      (14)
----------------------------------------------------------------------------------------------------------
 
GLOBAL CONSUMER
Emerging Markets....................................  $  146   $  243      (40)  $  308    $  485      (36)
Developed Markets...................................     231      216        7      498       451       10
                                                    -----------------         -------------------
TOTAL...............................................  $  377   $  459      (18)  $  806    $  936      (14)
----------------------------------------------------------------------------------------------------------
 
GLOBAL CORPORATE BANKING
Emerging Markets....................................  $  403   $  421       (4)  $  904    $  870        4
Global Relationship Banking.........................     259      242        7      507       442       15
                                                    -----------------         -------------------
----------------------------------------------------------------------------------------------------------
TOTAL...............................................  $  662   $  663        -   $1,411    $1,312        8

(A)  Reclassified to conform to the latest quarter's presentation.
----------------------------------------------------------------------------------------------------------
</TABLE> 

4
<PAGE>
 
-------------------------------------------------------------------------------
GLOBAL CONSUMER
-------------------------------------------------------------------------------


The Global Consumer business meets the financial services needs of consumer
customers across the regions of the world.


<TABLE>
<CAPTION>
 
                                                       SECOND QUARTER      %        SIX MONTHS        %
                                                    -----------------         ------------------
(In Millions of Dollars)                               1998   1997 (A)  Change    1998   1997 (A)  Change
---------------------------------------------------------------------------------------------------------
<S>                                                   <C>     <C>       <C>      <C>     <C>       <C>
Adjusted Revenue....................................  $4,044   $3,544       14   $7,551   $7,048        7
Adjusted Operating Expense..........................   2,362    1,959       21    4,343    3,865       12
                                                    -----------------         ------------------
OPERATING MARGIN....................................   1,682    1,585        6    3,208    3,183        1
Credit Costs (B)....................................   1,086      922       18    1,972    1,816        9
                                                    -----------------         ------------------
OPERATING MARGIN LESS CREDIT COSTS..................     596      663      (10)   1,236    1,367      (10)
Additional Provision................................      25       25        -       50       50        -
                                                    -----------------         ------------------
INCOME BEFORE TAXES.................................     571      638      (11)   1,186    1,317      (10)
Income Taxes........................................     194      179        8      380      381        -
                                                    -----------------         ------------------
NET INCOME..........................................  $  377   $  459      (18)  $  806   $  936      (14)
---------------------------------------------------------------------------------------------------------
 
Average Assets (In Billions of Dollars).............  $  140   $  132        6   $  136   $  131        4
Return on Assets (%)................................    1.08     1.39        -     1.20     1.44        -
---------------------------------------------------------------------------------------------------------
</TABLE>

(A)  Reclassified to conform to the latest quarter's presentation.
(B)  Includes the effect of credit card securitization activity and the effect
     related to credit card receivables held for sale.
-------------------------------------------------------------------------------

Global Consumer income before taxes was $571 million and $1.2 billion in the
1998 second quarter and six months, compared with $638 million and $1.3 billion
in 1997, reflecting improved results in U.S. bankcards and the Citibanking
businesses in North America, Japan, and Europe, offset by UCS acquisition
premium costs and lower earnings in the emerging markets of Asia Pacific and
Latin America.  Net income was $377 million and $806 million in the 1998 second
quarter and six months, compared with $459 million and $936 million for 1997.
Return on assets was 1.08% and 1.20% in the quarter and six months, compared to
1.39% and 1.44% a year ago.

Total consumer accounts reached 70 million as of June 30, 1998 in 57 countries
and territories, up from 55 million a year ago, principally reflecting an
increase of 14 million related to UCS, and increases in Latin America and Asia
Pacific.

Adjusted revenue of $4.0 billion in the quarter and $7.6 billion in the six
months was up $500 million and $503 million from 1997, primarily due to the
acquisition of UCS (which contributed $336 million of revenue growth) and
improvements in U.S. bankcards.  Revenue also reflected improvements in the
Citibanking businesses in North America and Japan, and in the Private Bank, and
a decline in Asia Pacific, reflecting the effect of foreign currency translation
and spread compression that was partially offset by business volume growth,
principally in customer deposits.  Net interest revenue increased 13% in the
quarter and 6% in the six months, while fee and commission revenue was up 14%
and 9%, respectively, principally due to U.S. bankcards, including UCS.  Foreign
currency translation reduced revenue growth by approximately 5 percentage points
in both the 1998 second quarter and six months.

Adjusted operating expense increased $403 million or 21% in the quarter and $478
million or 12% in the six months from the 1997 periods, reflecting the
acquisition of UCS (which added $227 million), higher advertising and marketing,
and spending on technology initiatives primarily related to electronic banking,
together with business volume growth and investment in new markets.  Foreign
currency translation reduced expense growth by approximately 5 percentage points
in both the 1998 second quarter and six months.

                                                                               5
<PAGE>
 
                                                              CITICORP [LOGO](R)

Credit costs in the quarter were $1.1 billion ($910 million excluding UCS),
compared with $886 million in the 1998 first quarter and $922 million a year
ago, reflecting ratios of net credit losses to average managed loans of 2.88%
(2.66% excluding UCS), 2.64%, and 2.73% in the respective quarters.

The Global Consumer business continued to build the allowance for credit losses
with charges of $25 million in excess of net write-offs in both the 1998 and
1997 second quarters and $50 million in both six month periods.

Net credit losses and the related loss ratios may increase from the 1998 second
quarter as a result of economic conditions, particularly in Asia Pacific and
Latin America, the credit performance of the portfolios, including bankruptcies,
seasonal factors, and other changes in portfolio levels.  See "Global Consumer
Portfolio Review" on page 11 and "Provision and Credit Loss Reserves" on page 32
for additional discussion of the consumer portfolio.

With income taxes attributed to core businesses on the basis of local tax rates,
effective tax rates were 34% and 32% in the 1998 second quarter and six months,
up from 28% and 29% in the year-ago periods, reflecting changes in the
geographic mix and nature of earnings.  The difference between the local tax
rates attributed to core businesses and Citicorp's overall effective tax rate is
included in Corporate Items.


------------------------------------------------------------------------------- 
CITIBANKING
------------------------------------------------------------------------------- 
<TABLE> 
<CAPTION> 
 
                                                       SECOND QUARTER       %        SIX MONTHS         %
                                                    ------------------         -------------------
(In Millions of Dollars)                               1998    1997 (A)  Change    1998    1997 (A)  Change
-----------------------------------------------------------------------------------------------------------
 
<S>                                                   <C>      <C>       <C>      <C>      <C>       <C>
Revenue.............................................  $1,620    $1,531        6   $3,150    $3,012        5
Operating Expense...................................   1,229     1,100       12    2,374     2,172        9
                                                    ------------------         -------------------
OPERATING MARGIN....................................     391       431       (9)     776       840       (8)
Credit Costs........................................     144       145       (1)     281       293       (4)
                                                    ------------------         -------------------
OPERATING MARGIN LESS CREDIT COSTS..................     247       286      (14)     495       547      (10)
Additional Provision................................      (4)        -       NM       (6)        -       NM
                                                    ------------------         -------------------
INCOME BEFORE TAXES.................................     251       286      (12)     501       547       (8)
Income Taxes........................................      96        92        4      166       176       (6)
                                                    ------------------         -------------------
NET INCOME..........................................  $  155    $  194      (20)  $  335    $  371      (10)
                                                    -------------------------------------------------------
 
 
Average Assets (In Billions of Dollars).............  $   88    $   84        5   $   87    $   83        5
Return on Assets (%)................................    0.71      0.93        -     0.78      0.90        -
-----------------------------------------------------------------------------------------------------------
</TABLE>

(A)  Reclassified to conform to the latest quarter's presentation.
NM   Not meaningful, as percentage equals or exceeds 100%.
-------------------------------------------------------------------------------

Income before taxes from Citibanking activities  --  delivering products and
services to customers through branches and electronic delivery systems  --  was
$251 million and $501 million in the 1998 second quarter and six months.  The
1998 results compared with $286 million and $547 million in the same 1997
periods, reflecting improvements in North America, Japan, and Europe that were
more than offset by spending on technology initiatives primarily related to
electronic banking, and declines in Asia Pacific and Latin America.  Net income
in the 1998 second quarter and six months was $155 million and $335 million,
compared with $194 million and $371 million in 1997, respectively.  Return on
assets was 0.71% and 0.78% in the quarter and six months, compared with 0.93%
and 0.90% a year ago.

Revenue of $1.6 billion and $3.1 billion in the 1998 second quarter and six
months, increased 6% and 5% from 1997, as customer accounts increased 8% to 21
million and average customer deposits grew 9% (15% excluding the effect of
foreign currency translation) to $101 billion.  Developed markets revenue grew
9% and 8% in the quarter and six months, principally reflecting growth in the
U.S. and Japan, and in the quarter, an increase in Europe.  Emerging markets
revenue was essentially unchanged in the quarter, and declined 2% in the six
months, reflecting economic conditions in Asia Pacific (including weakened
currencies) and moderate growth in Latin America, including reduced spreads in
certain 

6
<PAGE>
 
                                                              CITICORP [LOGO](R)

countries.  Foreign currency translation reduced Citibanking revenue
growth by approximately 7 and 6 percentage points in the 1998 second quarter and
six months, respectively, primarily in the emerging markets.

Operating expense of $1.2 billion in the 1998 second quarter and $2.4 billion in
the six months increased 12% and 9% from 1997.  Expense increased 14% and 11% in
the developed markets and 7% and 6% in the emerging markets, respectively,
reflecting account and business volume growth, increased spending on technology
initiatives primarily related to electronic banking, and advertising and
marketing.  Foreign currency translation reduced Citibanking expense growth by
approximately 5 and 6 percentage points in the 1998 second quarter and six
months, respectively, primarily in the emerging markets.

Credit costs in the quarter were essentially unchanged from the year-ago
quarter, and were up $7 million from the previous quarter, reflecting
improvement in the U.S. and Europe, offset by higher net credit losses in Latin
America and Asia Pacific.  The net credit loss ratio was 0.85% in the 1998
second quarter, compared with 0.83% in the 1998 first quarter and 0.87% in the
1997 second quarter.  The emerging markets net credit loss ratio was 0.88% in
the 1998 second quarter, compared with 0.70% in the 1998 first quarter and 0.54%
in the 1997 second quarter.  Foreign currency translation reduced reported net
credit losses by approximately $10 million in the 1998 second quarter and $24
million in the six months.  The additional provision in both the 1998 second
quarter and six months, reflected increases in Asia Pacific and Latin America
that were more than offset by reserve releases in North America due to continued
credit improvement in the mortgage portfolio.


------------------------------------------------------------------------------- 
CARDS
------------------------------------------------------------------------------- 
<TABLE>
<CAPTION>
 
                                                       SECOND QUARTER      %        SIX MONTHS        %
                                                    -----------------         ------------------
(In Millions of Dollars)                               1998   1997 (A)  Change    1998   1997 (A)  Change
---------------------------------------------------------------------------------------------------------
 
<S>                                                   <C>     <C>       <C>      <C>     <C>       <C>
Adjusted Revenue....................................  $2,121   $1,734       22   $3,816   $3,486        9
Adjusted Operating Expense..........................     930      675       38    1,570    1,341       17
                                                    -----------------         ------------------
OPERATING MARGIN....................................   1,191    1,059       12    2,246    2,145        5
Credit Costs........................................     945      778       21    1,702    1,525       12
                                                    -----------------         ------------------
OPERATING MARGIN LESS CREDIT COSTS..................     246      281      (12)     544      620      (12)
Additional Provision................................      29       25       16       56       50       12
                                                    -----------------         ------------------
INCOME BEFORE TAXES.................................     217      256      (15)     488      570      (14)
Income Taxes........................................      71       70        1      166      164        1
                                                    -----------------         ------------------
NET INCOME..........................................  $  146   $  186      (22)  $  322   $  406      (21)
---------------------------------------------------------------------------------------------------------
 
Average Assets (In Billions of Dollars).............  $   36   $   31       16   $   33   $   31        6
Return on Assets (%)................................    1.63     2.41        -     1.97     2.64        -
---------------------------------------------------------------------------------------------------------
</TABLE>

(A)  Reclassified to conform to the latest quarter's presentation.
--------------------------------------------------------------------------------

During the quarter, Citibank completed the previously announced acquisition of
UCS.  The acquisition added $14.5 billion in managed customer receivables and 14
million accounts to U.S. bankcards, bringing the totals to $60.3 billion and 38
million, respectively, at June 30, 1998.  In the quarter and six months, UCS
contributed $336 million to revenue, $227 million to expense, and $176 million
to credit costs, resulting in a net loss of approximately $44 million.  These
amounts included $107 million (pretax) of UCS acquisition premium costs
(including funding costs associated with the acquisition purchase premium).

Card accounts worldwide totaled 49 million as of June 30, 1998, up from 36
million a year ago, principally reflecting the acquisition of UCS.  U.S.
bankcards accounts (excluding UCS) declined by 3% from a year ago, reflecting
competitive pressures and continued risk management initiatives.  Cards in the
emerging markets grew 11% from a year ago, primarily in Latin America.

                                                                               7
<PAGE>
 
                                                              CITICORP [LOGO](R)

Income before taxes from Cards worldwide  --  bankcards, Diners Club, and
private label cards  --  was $217 million and $488 million in the 1998 second
quarter and six months, down $39 million and $82 million from the year-ago
periods, reflecting improvements in U.S. bankcards, which were offset by the UCS
acquisition premium costs and lower earnings in Asia Pacific and Latin America.
Cards worldwide return on managed assets (including securitized card
receivables) was 0.81% and 1.00% in the quarter and six months, compared with
1.33% and 1.46% in the year-ago periods.  Net income for the 1998 second quarter
and six months was $146 million and $322 million, compared with $186 million and
$406 million in 1997.

Adjusted revenue of $2.1 billion and $3.8 billion in the 1998 second quarter and
six months increased $387 million or 22% and $330 million or 9% from 1997,
primarily reflecting the acquisition of UCS.  Excluding UCS, U.S. bankcards
revenue was up 9% and 5% in the quarter and six months, reflecting risk-based
pricing strategies and higher interchange fee revenue, and in the six months
reduced spreads.  Interchange fee revenue reflected charge volume growth of 8%
in the quarter and 6% in the six months and pricing changes.  Revenue in
emerging markets Cards was down 18% and 20%, respectively, resulting from lower
revenue in Asia Pacific together with reduced earnings in Credicard, a 33%-owned
Brazilian affiliate.  Foreign currency translation reduced Cards revenue growth
by approximately 3 percentage points in both the 1998 second quarter and six
months, respectively.

Adjusted operating expense in the developed markets was up $260 million and $234
million in the quarter and six months, principally due to UCS and increased
marketing costs.  Emerging markets expense declined 3% and 2% as the effect of
foreign currency translation more than offset account and business volume
growth, increased collection costs, and continued investment in new markets.
Foreign currency translation reduced Cards expense growth by 5 percentage points
in both the 1998 second quarter and six months.

Credit costs of $945 million increased $188 million from the preceding quarter
and $167 million from the 1997 quarter, principally reflecting the acquisition
of UCS.  Credit costs in U.S. bankcards were $842 million or 5.73% ($667 million
or 5.97% excluding UCS) of average managed loans for the quarter compared to
$668 million or 5.96% in the 1998 first quarter and $683 million or 6.13% a year
ago.  The 12-month-lagged loss ratio was 5.98% (excluding UCS) in the quarter,
compared with 6.03% in the 1998 first quarter and 6.51% a year ago.  The percent
of gross write-offs from bankruptcies in the quarter was 41.1% (40.3% excluding
UCS), compared with 37.0% in the prior quarter and 40.2% in the 1997 second
quarter.  U.S. bankcards managed loans delinquent 90 days or more were $942
million or 1.58% ($766 million or 1.70% excluding UCS) at quarter-end, compared
with $842 million or 1.88% in the prior quarter and $843 million or 1.86% a year
ago.

Credit costs in non-U.S. bankcard portfolios were $103 million or 4.42% of
average managed loans, compared with $89 million or 3.95% in the preceding
quarter and $95 million or 4.14% in the 1997 quarter.  Loans delinquent 90 days
or more were $220 million or 2.30% as of June 30, 1998, compared with $216
million or 2.30% in the prior quarter and $206 million or 2.18% a year ago.
Credit costs and loans delinquent 90 days or more primarily reflect higher
amounts in Asia Pacific, partially offset by the effect of foreign currency
translation.

Cards continued to build the allowance for credit losses with charges of $29
million and $56 million in excess of net write-offs in the 1998 second quarter
and six months.

8
<PAGE>
 
                                                              CITICORP [LOGO](R)


------------------------------------------------------------------------------- 
PRIVATE BANK
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
 
                                                       SECOND QUARTER      %        SIX MONTHS        %
                                                    -----------------         ------------------
(In Millions of Dollars)                               1998   1997 (A)  Change    1998   1997 (A)  Change
---------------------------------------------------------------------------------------------------------
 
<S>                                                   <C>     <C>       <C>      <C>     <C>       <C>
Adjusted Revenue....................................  $ 303     $ 279        9   $ 585     $ 550        6
Adjusted Operating Expense..........................    203       184       10     399       352       13
                                                    -----------------         ------------------
OPERATING MARGIN....................................    100        95        5     186       198       (6)
Credit Benefits.....................................     (3)       (1)      NM     (11)       (2)      NM
                                                    -----------------         ------------------
 
INCOME BEFORE TAXES.................................    103        96        7     197       200       (2)
Income Taxes........................................     27        17       59      48        41       17
                                                    -----------------         ------------------
NET INCOME..........................................  $  76     $  79       (4)  $ 149     $ 159       (6)
---------------------------------------------------------------------------------------------------------
 
Average Assets (In Billions of Dollars).............  $  16     $  17       (6)  $  16     $  17       (6)
Return on Assets (%)................................   1.91      1.86        -    1.88      1.89        -
---------------------------------------------------------------------------------------------------------
</TABLE>

(A)  Reclassified to conform to the latest quarter's presentation.
NM   Not meaningful, as percentage equals or exceeds 100%.
------------------------------------------------------------------------------- 

Private Bank  --  which provides personalized wealth management services for
high net-worth clients  --  income before taxes was $103 million and $197
million in the 1998 second quarter and six months, compared with $96 million and
$200 million in 1997.  Both periods reflected revenue improvements and increased
operating costs.  Net income was $76 million and $149 million in the 1998 second
quarter and six months, compared to $79 million and $159 million in 1997.

Client business volumes under management at the end of the quarter reached $108
billion, up $8 billion or 8% from $100 billion a year earlier, reflecting
double-digit growth in all regions, except in Asia Pacific, where due to
economic conditions in the region, managed assets declined.  The increase from
1997 primarily reflected growth in custody, trust, and fiduciary balances.

Adjusted revenue of $303 million and $585 million in the 1998 second quarter and
six months increased 9% and 6% from 1997, primarily due to growth in other fee
revenue and client-related foreign exchange.  Developed markets revenue grew 12%
and 7% in the quarter and six months, reflecting increases across all regions.
Emerging markets revenue was up 4% in the quarter and 5% in the six months as
growth in Latin America was partially offset by a slight decline in Asia
Pacific.

Adjusted operating expense of $203 million and $399 million in the 1998 second
quarter and six months increased 10% and 13% from 1997, primarily reflecting an
increased sales force and product management costs.  Foreign currency
translation reduced expense growth by approximately 3 percentage points in both
the 1998 second quarter and six months.

Credit costs were a net benefit of $3 million in the quarter and $11 million in
the six months, as recoveries in North America and Europe were partially offset
by write-offs in Asia Pacific.  Loans delinquent 90 days or more were $197
million or 1.23% of loans, compared to $186 million or 1.21% in the preceding
quarter and $187 million or 1.19% in the 1997 second quarter, reflecting
increases in Asia Pacific and improvements from a year earlier in North America.

                                                                               9
<PAGE>
 
                                                              CITICORP [LOGO](R)
-------------------------------------------------------------------------------
GLOBAL CONSUMER IN EMERGING MARKETS
------------------------------------------------------------------------------- 
<TABLE> 
<CAPTION> 
                                                      SECOND QUARTER      %        SIX MONTHS        %
                                                    ----------------         ------------------
(In Millions of Dollars)                              1998   1997 (A)  Change    1998   1997 (A)  Change
--------------------------------------------------------------------------------------------------------
 
 
<S>                                                   <C>    <C>       <C>      <C>     <C>       <C>
Adjusted Revenue....................................  $ 923    $ 986       (6)  $1,795   $1,934       (7)
Adjusted Operating Expense..........................    601      581        3    1,164    1,121        4
                                                    ----------------         ------------------
OPERATING MARGIN....................................    322      405      (20)     631      813      (22)
Credit Costs........................................    133       97       37      234      189       24
                                                    ----------------         ------------------
OPERATING MARGIN LESS CREDIT COSTS..................    189      308      (39)     397      624      (36)
Additional Provision................................     11        7       57       22       10       NM
                                                    ----------------         ------------------
INCOME BEFORE TAXES.................................    178      301      (41)     375      614      (39)
Income Taxes........................................     32       58      (45)      67      129      (48)
                                                    ----------------         ------------------
NET INCOME..........................................  $ 146    $ 243      (40)  $  308   $  485      (36)
--------------------------------------------------------------------------------------------------------
 
Average Assets (In Billions of Dollars).............  $  42    $  43       (2)  $   42   $   42        -
Return on Assets (%)................................   1.39     2.27        -     1.48     2.33        -
--------------------------------------------------------------------------------------------------------
</TABLE>

(A)  Reclassified to conform to the latest quarter's presentation.
NM   Not meaningful, as percentage equals or exceeds 100%.
--------------------------------------------------------------------------------

Net income in the emerging markets was $146 million and $308 million in the 1998
second quarter and six months, down from $243 million and $485 million a year
ago, reflecting economic conditions, including weakened currencies, in Asia
Pacific, and lower earnings in Latin America.  In the quarter and six months,
Cards represented 27% and 24% of emerging markets net income, compared with 36%
and 37% in 1997, respectively.

Asia Pacific (excluding Japan and the Indian subcontinent, but including
Australia and New Zealand) adjusted revenue declined 12% and 14% in the 1998
second quarter and six months from the 1997 periods, reflecting economic
conditions in the region including the effect of foreign currency translation.
Adjusted revenue in Latin America was essentially unchanged from the 1997 second
quarter and six months, reflecting a decline in Credicard and reduced spreads in
certain countries, offset by business volume growth, as well as improvements in
the Private Bank.  Foreign currency translation reduced revenue growth by
approximately 13 percentage points in both the second quarter and six months.

Adjusted operating expense was up 3% in the quarter and 4% in the six months,
reflecting a decline in Asia Pacific of 4% and 5%, offset by an 8% and 9%
increase in Latin America, primarily in the Citibanking business.  Foreign
currency translation reduced expense growth by approximately 14 and 13
percentage points in the quarter and six months, respectively.

Credit costs in the emerging markets increased $32 million from the 1998 first
quarter, and increased $36 million from the 1997 second quarter.  The net credit
loss ratio in Asia Pacific was 1.16%, up from 0.77% in the 1998 first quarter
and 0.72% a year ago.  The net credit loss ratio in Latin America was 2.51%
compared to 1.99% in the 1998 first quarter and 2.30% a year ago.  Emerging
markets managed loans delinquent 90 days or more were $647 million or 1.95% at
quarter-end, compared with $620 million or 1.85% at March 31, 1998 and $461
million or 1.32% a year ago.  The emerging markets businesses built the
allowance for loan losses by $11 million in the quarter and $22 million in the
six months.

10
<PAGE>
 
                                                              CITICORP [LOGO](R)
--------------------------------------------------------------------------------
GLOBAL CONSUMER IN DEVELOPED MARKETS
--------------------------------------------------------------------------------
<TABLE> 
<CAPTION> 

                                                       Second Quarter      %        SIX MONTHS        %
                                                    -----------------         ------------------
(In Millions of Dollars)                               1998   1997 (A)  Change    1998   1997 (A)  Change
---------------------------------------------------------------------------------------------------------
<S>                                                   <C>     <C>       <C>      <C>     <C>       <C>
Adjusted Revenue....................................  $3,121   $2,558       22   $5,756   $5,114       13
Adjusted Operating Expense..........................   1,761    1,378       28    3,179    2,744       16
                                                    -----------------         ------------------
OPERATING MARGIN....................................   1,360    1,180       15    2,577    2,370        9
Credit Costs........................................     953      825       16    1,738    1,627        7
                                                    -----------------         ------------------
OPERATING MARGIN LESS CREDIT COSTS..................     407      355       15      839      743       13
Additional Provision................................      14       18      (22)      28       40      (30)
                                                    -----------------         ------------------
INCOME  BEFORE TAXES................................     393      337       17      811      703       15
Income Taxes........................................     162      121       34      313      252       24
                                                    -----------------         ------------------
NET INCOME..........................................  $  231   $  216        7   $  498   $  451       10
---------------------------------------------------------------------------------------------------------
 
Average Assets (In Billions of Dollars).............  $   98   $   89       10   $   94   $   89        6
Return on Assets (%)................................    0.95     0.97        -     1.07     1.02        -
---------------------------------------------------------------------------------------------------------
</TABLE>

(A)  Reclassified to conform to the latest quarter's presentation.
-------------------------------------------------------------------------------

Income before taxes in the developed markets was $393 million and $811 million
in the 1998 second quarter and six months, up $56 million and $108 million from
1997, reflecting improvements in U.S. bankcards and in Citibanking in North
America, Japan, and Europe that were partially offset by UCS acquisition premium
costs and increased spending on electronic banking initiatives.  Net income for
the 1998 second quarter and six months was $231 million and $498 million,
compared with $216 million and $451 million in 1997.

Adjusted revenue was up 22% in the quarter and up 13% in the six months,
reflecting the acquisition of UCS, and other increases in U.S. bankcards and in
Citibanking businesses across all regions.  Adjusted operating expense grew 28%
and 16%, reflecting UCS, spending on technology initiatives primarily related to
electronic banking, and increased advertising and marketing, together with
business volume growth.

Credit costs in the developed markets increased by $128 million from the 1997
second quarter, reflecting the addition of UCS (credit costs of $176 million),
partially offset by improvements in Citibanking, U.S. bankcards, and credit
recoveries in the Private Bank.  Managed loans delinquent 90 days or more were
$2.7 billion or 2.25% ($2.5 billion or 2.39% excluding UCS) at quarter-end,
compared with $2.6 billion or 2.54% at March 31, 1998 and $2.9 billion or 2.80%
a year ago.  The developed markets businesses built the allowance for loan
losses by $14 million in the quarter and $28 million in the six months.

-------------------------------------------------------------------------------
CONSUMER PORTFOLIO REVIEW
-------------------------------------------------------------------------------

In the consumer portfolio, credit loss experience is often expressed in terms of
annualized net credit losses as a percentage of average loans.  Pricing and
credit policies reflect the loss experience of each particular product.
Consumer loans are generally written off no later than a predetermined number of
days past due on a contractual basis, or earlier in the event of bankruptcy.
The number of days is set at an appropriate level according to loan product and
country.

The table on page 12 summarizes delinquency and net credit loss experience in
both the managed and on-balance sheet loan portfolio in terms of loans 90 days
or more past due, net credit losses, and as a percentage of related loans.

                                                                              11
<PAGE>
 
                                                              CITICORP [LOGO](R)
<TABLE> 
<CAPTION> 
-------------------------------------------------------------------------------
CONSUMER LOAN DELINQUENCY AMOUNTS, NET CREDIT LOSSES, AND RATIOS
--------------------------------------------------------------------------------
                                       TOTAL                                       AVERAGE
                                       LOANS     90 DAYS OR MORE PAST DUE (A)       LOANS           NET CREDIT LOSSES (A)
                                   ------------------------------------------------------------------------------------------
(In Millions of Dollars,             JUNE 30,   JUNE 30,   Mar. 31,   June 30,     2ND QTR.    2ND QTR.   1st Qtr.   2nd Qtr.
except Loan Amounts in Billions)       1998       1998       1998       1997         1998        1998       1998       1997
-----------------------------------------------------------------------------------------------------------------------------
 
<S>                                  <C>        <C>        <C>        <C>        <C>           <C>        <C>        <C>
CITIBANKING........................    $ 68.2     $1,995     $2,014     $2,094        $ 68.0     $  144      $ 137      $ 145
Ratio..............................                 2.93%      2.97%      3.13%                    0.85%      0.83%      0.87%
CARDS
U.S. Bankcards (B).................      59.6        942        842        843          58.9        842        668        683
Ratio..............................                 1.58%      1.88%      1.86%                    5.73%      5.96%      6.13%
Other (C)..........................       9.6        220        216        206           9.3        103         89         95
Ratio..............................                 2.30%      2.30%      2.18%                    4.42%      3.95%      4.14%
PRIVATE BANK.......................      16.0        197        186        187          15.6          -         (7)         2
Ratio..............................                 1.23%      1.21%      1.19%                      NM         NM       0.04%
 
TOTAL MANAGED......................     153.4      3,354      3,258      3,330         151.8      1,089        887        925
RATIO..............................                 2.19%      2.37%      2.43%                    2.88%      2.64%      2.73%
-----------------------------------------------------------------------------------------------------------------------------
SECURITIZATION ACTIVITY (D)
Securitized Credit Card Receivables     (41.3)      (601)      (519)      (453)        (36.8)      (542)      (430)      (404)
Loans Held for Sale................      (4.7)       (40)       (39)       (37)         (4.6)       (37)       (31)       (33)
-----------------------------------------------------------------------------------------------------------------------------
TOTAL LOANS........................    $107.4     $2,713     $2,700     $2,840        $110.4     $  510      $ 426      $ 488
Ratio..............................                 2.53%      2.55%      2.59%                    1.86%      1.64%      1.82%
-----------------------------------------------------------------------------------------------------------------------------
 
MANAGED PORTFOLIO
DEVELOPED..........................    $120.1     $2,707     $2,638     $2,869        $118.5     $  956      $ 790      $ 828
Ratio..............................                 2.25%      2.54%      2.80%                    3.24%      3.09%      3.26%
EMERGING...........................      33.3        647        620        461          33.3        133         97         97
Ratio..............................                 1.95%      1.85%      1.32%                    1.61%      1.21%      1.15%
-----------------------------------------------------------------------------------------------------------------------------
 
EMERGING PORTFOLIO (E)
ASIA PACIFIC.......................    $ 22.0     $  374     $  375     $  289        $ 22.1     $   63      $  42      $  44
Ratio..............................                 1.70%      1.67%      1.15%                    1.16%      0.77%      0.72%
LATIN AMERICA......................       9.9        227        202        152           9.8         61         46         46
Ratio..............................                 2.28%      2.10%      1.85%                    2.51%      1.99%      2.30%
CEEMEA (F).........................       1.4         46         43         20           1.4          9          9          7
Ratio..............................                 3.40%      3.03%      1.43%                    2.86%      2.78%      2.15%
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

(A)  The ratios of 90 days or more past due and net credit losses are calculated
     based on end-of-period and average loans, respectively, both net of
     unearned income.
(B)  The U.S. bankcards managed ratios of 90 days or more past due and net
     credit losses were reduced by 12 basis points and 24 basis points,
     respectively, in the current quarter, due to the addition of the UCS
     portfolio.
(C)  Includes bankcards outside of the U.S., worldwide Diners Club, and private
     label cards.
(D)  See page 35 for a description of the effect of credit card securitization
     activity.
(E)  Includes Private Bank and excludes Japan.
(F)  Central and Eastern Europe, Middle East, and Africa.
NM   Not meaningful.
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
CONSUMER LOAN BALANCES, NET OF UNEARNED INCOME
--------------------------------------------------------------------------------
<TABLE> 
<CAPTION> 
 
                                                          END OF PERIOD                         AVERAGE
                                               -------------------------------------------------------------------
                                                 JUNE 30,   Mar. 31,   June 30,     2ND QTR.   1st Qtr.   2nd Qtr.
(In Billions of Dollars)                           1998       1998       1997         1998       1998       1997
------------------------------------------------------------------------------------------------------------------
<S>                                              <C>        <C>        <C>          <C>        <C>        <C>
MANAGED........................................    $153.4     $137.3     $137.3       $151.8     $136.5     $135.5
Securitized Credit Card Receivables............     (41.3)     (27.6)     (24.2)       (36.8)     (27.4)     (24.7)
Loans Held for Sale............................      (4.7)      (3.8)      (3.6)        (4.6)      (3.6)      (3.4)
LOAN PORTFOLIO.................................    $107.4     $105.9     $109.5       $110.4     $105.5     $107.4
------------------------------------------------------------------------------------------------------------------
</TABLE>

12
<PAGE>
 
                                                              CITICORP [LOGO](R)

Total delinquencies 90 days or more past due in the managed portfolio were $3.4
billion with a related delinquency ratio of 2.19% ($3.2 billion or 2.29%
excluding UCS) at June 30, 1998, compared with $3.3 billion or 2.37% at March
31, 1998 and $3.3 billion or 2.43% a year ago.  Total managed net credit losses
in the 1998 second quarter were $1.1 billion and the related loss ratio was
2.88% ($913 million and 2.66% excluding UCS) compared with $887 million and
2.64% in the 1998 first quarter and $925 million and 2.73% in the 1997 second
quarter.

In Citibanking, managed loans delinquent 90 days or more were $2.0 billion with
a related ratio of 2.93% at June 30, 1998, compared with $2.0 billion or 2.97%
at March 31, 1998 and $2.1 billion or 3.13% at June 30, 1997.  The decline in
delinquencies from a year ago reflects improvements in the U.S. mortgage
portfolio and the effect of foreign currency translation, partially offset by
increases in Asia Pacific and Latin America.  Net credit losses in the 1998
second quarter were $144 million and the related loss ratio was 0.85%, compared
with $137 million and 0.83% in the 1998 first quarter and $145 million and 0.87%
in the 1997 second quarter, reflecting higher losses in Latin America and Asia
Pacific, offset by improvement in U.S. mortgages and Europe, and the effect of
foreign currency translation.

U.S. bankcards managed loans delinquent 90 days or more were $942 million or
1.58% ($766 million or 1.70% excluding UCS) at quarter-end, compared with $842
million or 1.88% at March 31, 1998 and $843 million or 1.86% a year ago.  Net
credit losses were $842 million and the related loss ratio was 5.73% ($667
million and 5.97% excluding UCS) in the quarter, compared to $668 million and
5.96% in the 1998 first quarter and $683 million and 6.13% a year ago.  The 12-
month-lagged loss ratio was 5.98% (excluding UCS) in the quarter, compared with
6.03% in the 1998 first quarter and 6.51% a year ago.  The percent of gross
write-offs from bankruptcies in the quarter was 41.1% (40.3% excluding UCS),
compared with 37.0% in the prior quarter and 40.2% in the 1997 second quarter.

The other Cards businesses include bankcards outside the United States,
worldwide Diners Club, and private label cards.  Loans delinquent 90 days or
more of $220 million at June 30, 1998 were up from $216 million at March 31,
1998 and $206 million at June 30, 1997.  Net credit losses in the 1998 second
quarter of $103 million increased from $89 million in the prior quarter and $95
million a year ago.  The increase in both delinquencies and net credit losses
primarily reflects higher amounts in Asia Pacific, partially offset by the
effect of foreign currency translation.  Additionally, delinquencies reflect
higher amounts in Latin America.

Private Bank loans delinquent 90 days or more were $197 million or 1.23% of
loans at June 30, 1998, up from $186 million or 1.21% at March 31, 1998 and $187
million or 1.19% a year ago.  The increase from both the 1998 first quarter and
a year ago primarily reflects an increase in nonaccrual loans in Asia Pacific.
As compared to a year ago, delinquencies also reflect improvements in North
America.

Total consumer loans on the balance sheet delinquent 90 days or more on which
interest continued to be accrued were $983 million at June 30, 1998, compared
with $988 million at March 31, 1998 and $937 million at June 30, 1997.  Included
in these amounts are U.S. government-guaranteed student loans of $247 million,
$256 million, and $215 million, respectively.  Other consumer loans delinquent
90 days or more on which interest continued to be accrued (which primarily
include worldwide bankcard receivables and certain portfolios in Germany) were
$736 million, $732 million, and $722 million, respectively.  The majority of
these other loans are written off upon reaching a stipulated number of days past
due.  See the table entitled "Cash-Basis, Renegotiated, and Past Due Loans" on
page 45.

Citicorp's policy for suspending the accrual of interest on consumer loans
varies depending on the terms, security, and credit loss experience
characteristics of each product, as well as write-off criteria in place.  At
June 30, 1998, interest accrual had been suspended on $1.9 billion of consumer
loans, primarily consisting of Citibanking loans, compared with $1.9 billion at
March 31, 1998 and $2.0 billion at June 30, 1997.  The decline from June 30,
1997 reflects improvements in U.S. mortgages and the effect of foreign currency
translation, partially offset by increases in Asia Pacific.  U.S. mortgages on
which the accrual of interest had been suspended were $424 million at June 30,
1998, down from $475 million at March 31, 1998 and $604 million at June 30,
1997, reflecting continued improvement in the credit quality of the portfolio.

                                                                              13
<PAGE>
 
                                                              CITICORP [LOGO](R)

The portion of Citicorp's aggregate allowance for credit losses attributed to
the consumer portfolio was $2.9 billion as of June 30, 1998, up from $2.5
billion as of March 31, 1998 and June 30, 1997, reflecting the addition of $320
million of credit loss reserves related to the acquisition of UCS.  The
aggregate allowance for credit losses reflected an additional provision of $25
million in excess of net write-offs per quarter for each period presented.  The
allowance as a percentage of loans on the balance sheet was 2.66% as of June 30,
1998, compared with 2.36% at March 31, 1998 and 2.24% at June 30, 1997.  See
"Provision and Credit Loss Reserves" on page 32 for further discussion.

Net credit losses and the related loss ratios may increase from the 1998 second
quarter as a result of economic conditions, particularly in Asia Pacific and
Latin America, the credit performance of the portfolios, including bankruptcies,
seasonal factors, and other changes in portfolio levels.  Additionally,
delinquencies and loans on which the accrual of interest is suspended could
remain at relatively high levels.

-------------------------------------------------------------------------------
GLOBAL CORPORATE BANKING
-------------------------------------------------------------------------------

Global Corporate Banking serves corporations, financial institutions,
governments, investors, and other participants in capital markets throughout the
world.


<TABLE>
<CAPTION>
 --------------------------------------------------------------------------------------------------------
                                                       SECOND QUARTER      %        SIX MONTHS        %
                                                    -----------------         ------------------
(In Millions of Dollars)                               1998   1997 (A)  Change    1998   1997 (A)  Change
 
--------------------------------------------------------------------------------------------------------- 
<S>                                                   <C>     <C>       <C>      <C>     <C>       <C>
Adjusted Revenue....................................  $2,409   $1,994       21   $4,721   $3,924       20
Adjusted Operating Expense..........................   1,433    1,207       19    2,747    2,358       16
                                                    -----------------         ------------------
OPERATING MARGIN....................................     976      787       24    1,974    1,566       26
Credit Costs (Benefits).............................      41      (36)      NM       85     (111)      NM
                                                    -----------------         ------------------
INCOME BEFORE TAXES.................................     935      823       14    1,889    1,677       13
Income Taxes........................................     273      160       71      478      365       31
NET INCOME..........................................  $  662   $  663        -   $1,411   $1,312        8
                                                    -----------------------------------------------------
 
 
Average Assets (In Billions of Dollars).............  $  178   $  152       17   $  175   $  150       17
Return on Assets (%)................................    1.49     1.75        -     1.63     1.76        -
---------------------------------------------------------------------------------------------------------
</TABLE>

(A)  Reclassified to conform to the latest quarter's presentation.
NM   Not meaningful, as percentage equals or exceeds 100%.
 
-------------------------------------------------------------------------------

Global Corporate Banking income before taxes in the 1998 second quarter and six
months grew $112 million or 14% and $212 million or 13% from the comparable 1997
periods, while net income was essentially unchanged from the 1997 second quarter
and was up $99 million or 8% from the 1997 six months as changes in the nature
and geographic mix of pretax earnings increased the effective income tax rates
in the quarterly and six-month comparisons.  Growth in average assets of 17% in
both the quarterly and six-month comparisons outpaced net income growth and
resulted in a decline in return on average assets of 26 basis points and 13
basis points in the quarterly and six-month comparisons.  The Emerging Markets
business contributed 61% and 64% of Global Corporate Banking net income in the
1998 second quarter and six months, and Global Relationship Banking contributed
39% and 36% of Global Corporate Banking net income.

Adjusted revenue grew 21% and 20% (both 25% excluding the effect of foreign
currency translation) in the quarterly and six-month comparisons.  The growth in
both periods reflected improved trading-related revenue, higher aggregate
securities transactions and net asset gains, growth in transaction banking
services and corporate finance revenue, improved treasury results and, in the
six-month period, higher venture capital revenue.  Growth in these areas was
partially offset by a significant second quarter 1997 dividend from an
investment of an affiliate.  Adjusted operating expense increased 19% and 16%
(22% and 20% excluding the effect of foreign currency translation) in the
quarterly and six-month comparisons.  Revenue growth outpaced expense growth by
ratios of 1.8 to 1 and 2.0 to 1 in the quarterly and 

14
<PAGE>
 
                                                              CITICORP [LOGO](R)
six-month comparisons, resulting in operating margin growth of 24% and 26%
(30% and 34% excluding the effect of foreign currency translation),
respectively. Credit costs rose $77 million and $196 million in the quarterly
and six-month comparisons primarily due to higher write-offs in Asia Pacific
coupled with lower gains from the sale of OREO and, in the six-month comparison,
a $50 million recovery in 1997 from the refinancing agreement concluded with
Peru.

Cash-basis loans of $1.3 billion at June 30, 1998 declined $51 million from the
1998 first quarter, but increased $376 million from the year-ago quarter.  Cash-
basis loans in Global Relationship Banking of $300 million declined $77 million
from the 1998 first quarter and $134 million from the year-ago quarter.  Cash-
basis loans in the Emerging Markets of $1.0 billion increased $26 million from
the 1998 first quarter and $510 million from a year ago.  The increase from the
year-ago quarter is primarily due to the economic turmoil affecting Thailand and
Indonesia.  Emerging Markets cash-basis loans included $44 million and $83
million at June 30, 1998 and March 31, 1998, respectively, of balance sheet
credit exposures related to foreign currency derivative contracts with customers
for which the recognition of revaluation gains has been suspended.  The amount
included a year ago was not material.  Commercial OREO of $348 million improved
$2 million and $134 million from the 1998 first quarter and the year-ago
quarter.  See the tables entitled "Cash-Basis, Renegotiated, and Past Due Loans"
and "Other Real Estate Owned and Assets Pending Disposition" on page 45.

Levels of trading-related and venture capital revenue and securities
transactions and net asset gains in Global Corporate Banking may fluctuate in
the future as a result of market and asset-specific factors.  See pages 30 and
31 for discussions of trading-related and venture capital revenue and securities
transactions and net asset gains that supplement the comments in the Emerging
Markets and Global Relationship Banking sections that follow.  Losses on
commercial lending activities can vary widely with respect to timing and amount,
particularly within any narrowly-defined business or loan type.  Credit costs
and cash-basis loans may increase from the 1998 second quarter level due to
conditions in Asia or other factors.  See "Provision and Credit Loss Reserves"
on page 32 for additional discussion of the Global Corporate Banking portfolio.

--------------------------------------------------------------------------------
EMERGING MARKETS
--------------------------------------------------------------------------------
<TABLE> 
<CAPTION>
                                                        SECOND QUARTER      %        SIX MONTHS        %
                                                    -----------------         ------------------
(In Millions of Dollars)                               1998   1997 (A)  Change    1998   1997 (A)  Change
---------------------------------------------------------------------------------------------------------
 
<S>                                                   <C>     <C>       <C>      <C>     <C>       <C>
Adjusted Revenue....................................  $1,127    $ 977       15   $2,241   $1,902       18
Adjusted Operating Expense..........................     530      473       12    1,028      919       12
                                                    -----------------         ------------------
OPERATING MARGIN....................................     597      504       18    1,213      983       23
Credit Costs (Benefits).............................      93       24       NM      156      (12)      NM
                                                    -----------------         ------------------
INCOME BEFORE TAXES.................................     504      480        5    1,057      995        6
Income Taxes........................................     101       59       71      153      125       22
                                                    -----------------         ---------
NET INCOME..........................................  $  403    $ 421       (4)  $  904   $  870        4
---------------------------------------------------------------------------------------------------------
 
Average Assets (In Billions of Dollars).............  $   84    $  70       20   $   83   $   68       22
Return on Assets (%)................................    1.92     2.41        -     2.20     2.58        -
---------------------------------------------------------------------------------------------------------
</TABLE>

(A)  Reclassified to conform to the latest quarter's presentation.
NM   Not meaningful, as percentage equals or exceeds 100%.
------------------------------------------------------------------------------- 

Emerging Markets operating margin in the 1998 second quarter and six months grew
$93 million or 18% and $230 million or 23% from the comparable 1997 periods as
revenue growth outpaced expense growth by ratios of 2.6 to 1 and 3.1 to 1,
respectively.  However, credit costs increased $69 million and $168 million in
the quarterly and six-month comparisons, reducing income before taxes growth to
5% and 6%, respectively.  Due to changes in the nature and geographic mix of
earnings, the effective income tax rate in the 1998 second quarter climbed to
20% from 12%, raising income taxes and producing a 4% decline in net income.
Net income in the six-month comparison grew 4%.

Adjusted revenue grew $150 million or 15% (23% excluding the effect of foreign
currency translation) and $339 million or 18% (27% excluding the effect of
foreign currency translation) in the quarterly and six-month comparisons.
Trading-

                                                                              15
<PAGE>
 
                                                              CITICORP [LOGO](R)

related revenue of $259 million and $530 million in the 1998 second quarter and
six months grew $104 million and $168 million from the comparable 1997 periods,
primarily due to strong foreign exchange results in Asia Pacific attributable to
unsettled financial markets in certain Asian countries. The aggregate of
securities transactions and net asset gains totaled $179 million and $397
million in the 1998 quarter and six months, up $45 million and $109 million from
the comparable 1997 periods, and included $174 million and $363 million in the
1998 periods and $58 million in the 1997 quarter and six months from the sale of
Brady bonds. This revenue in the 1997 six months also included $46 million
related to the refinancing agreement concluded with Peru. Transaction banking
services revenue grew at double digit rates in both the quarterly and six-month
comparisons and was complemented in both comparisons by strong treasury results.
Revenue in the 1997 second quarter and six months included a significant
dividend from an investment of an affiliate.

Adjusted revenue in Asia Pacific (comprising 13 countries and territories
excluding Japan and the Indian subcontinent, but including Australia and New
Zealand) grew 26% and 20% in the quarterly and six-month comparisons due to
improved trading-related revenue coupled with double-digit growth in transaction
banking services revenue and significantly improved treasury results.  No single
country or territory in the Emerging Markets Asia Pacific business exceeded 2%
of Citicorp's adjusted revenue or average assets in the 1998 second quarter or
six months.  Revenue attributed to the Embedded Bank and Emerging Local
Corporate strategies (Citicorp's plans to gain market share in selected emerging
market countries), together with new franchises, accounted for 4% of Emerging
Markets revenue in both the 1998 second quarter and six months and was up 43%
and 70% in the quarterly and six-month comparisons.  About 22% and 21% of the
revenue in the Emerging Markets business in the 1998 second quarter and six
months was attributable to business from multinational companies managed jointly
with Global Relationship Banking, with that revenue having grown 17% and 23% in
the quarterly and six-month comparisons.

Adjusted operating expense increased $57 million or 12% (19% excluding the
effect of foreign currency translation) and $109 million or 12% (18% excluding
the effect of foreign currency translation) in the quarterly and six-month
comparisons.  The growth reflected investment spending to build the franchise,
including costs associated with Citicorp's Embedded Bank and Emerging Local
Corporate strategies, and volume-related expense growth.

Credit costs rose $69 million and $168 million in the quarterly and six-month
comparisons, with Asia Pacific contributing $67 million and $125 million of the
increase, primarily from Indonesia and Thailand.  Credit costs in the 1998 and
1997 six months included recoveries of $9 million from the refinancing agreement
concluded with the Ivory Coast and $50 million from the refinancing agreement
concluded with Peru, respectively.

Average assets in the 1998 second quarter and six months grew $14 billion or 20%
and $15 billion or 22% reflecting growth across all geographic segments, and was
concentrated in the loan portfolio and transaction banking, products, together
with treasury initiatives.

16
<PAGE>
 
                                                              CITICORP [LOGO](R)

------------------------------------------------------------------------------
GLOBAL RELATIONSHIP BANKING
------------------------------------------------------------------------------ 
<TABLE> 
<CAPTION> 
                                                       SECOND QUARTER       %        SIX MONTHS         %
                                                    ------------------         -------------------
(In Millions of Dollars)                               1998    1997 (A)  Change    1998    1997 (A)  Change
-----------------------------------------------------------------------------------------------------------
 
<S>                                                   <C>      <C>       <C>      <C>      <C>       <C>
Adjusted Revenue....................................  $1,282    $1,017       26   $2,480    $2,022       23
Adjusted Operating Expense..........................     903       734       23    1,719     1,439       19
                                                    ------------------         -------------------
OPERATING MARGIN....................................     379       283       34      761       583       31
Credit Benefits.....................................     (52)      (60)     (13)     (71)      (99)     (28)
                                                    ------------------         -------------------
INCOME BEFORE TAXES.................................     431       343       26      832       682       22
Income Taxes........................................     172       101       70      325       240       35
                                                    ------------------         -------------------
NET INCOME..........................................  $  259    $  242        7   $  507    $  442       15
-----------------------------------------------------------------------------------------------------------
 
Average Assets (In Billions of Dollars).............  $   94    $   82       15   $   92    $   82       12
Return on Assets (%)................................    1.11      1.18        -     1.11      1.09        -
-----------------------------------------------------------------------------------------------------------
</TABLE>

(A)  Reclassified to conform to the latest quarter's presentation.
-------------------------------------------------------------------------------

Income before taxes from the Global Relationship Banking business in North
America, Europe, and Japan in the 1998 second quarter and six months grew $88
million or 26% and $150 million or 22% from the comparable 1997 periods.
However, increases in the effective income tax rates to 40% and 39% in the 1998
second quarter and six months from 29% and 35% in the respective 1997 periods
raised income taxes, and resulted in net income improvements of $17 million or
7% and $65 million or 15% in the quarterly and six-month comparisons.

Adjusted revenue grew $265 million or 26% and $458 million or 23% in the
quarterly and six-month comparisons.  Revenue growth in the quarterly comparison
reflected a $132 million gain on the disposition of two real-estate-related
equity interests obtained in connection with loan restructurings, an $87 million
improvement in trading-related revenue, double-digit growth in corporate finance
and investment management fees, moderate growth in transaction banking services
revenue, and essentially unchanged venture capital revenue, partially offset by
a $23 million gain on the sale of a business recognized in the 1997 second
quarter.  Revenue growth in the six-month comparison reflected a $169 million
improvement in venture capital revenue, a $135 million improvement in trading-
related revenue, the $132 million gain on the disposition of two real-estate-
related equity interests, double-digit growth in corporate finance and
investment management fees, and moderate growth in transaction banking services
revenue, partially offset by gains of $23 million and $32 million in 1997 from
the sales of a business and an investment from the acquisition finance
portfolio.

Adjusted operating expense grew $169 million or 23% and $280 million or 19% in
the quarterly and six-month comparisons, primarily attributable to increased
spending on technology, including costs related to the Year 2000 and the
European EMU, higher incentive compensation, and volume-related expense growth.

Credit costs in the 1998 quarter and six months were net benefits of $52 million
and $71 million, down from net benefits of $60 million and $99 million in the
comparable 1997 periods.  The decline in the six-month comparison is
attributable to a lower level of gains on the sale of OREO.

Average assets in the 1998 second quarter and six months grew $12 billion or 15%
and $10 billion or 12% reflecting growth primarily in trading, loan portfolio,
and transaction banking products.

                                                                              17
<PAGE>
 
<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------
CORPORATE ITEMS
---------------------------------------------------------------------------------------------------------
 
                                                      Second Quarter      %        SIX MONTHS         %
                                                    ----------------         -------------------
(In Millions of Dollars)                              1998   1997 (A)  Change    1998    1997 (A)  Change
---------------------------------------------------------------------------------------------------------
 
<S>                                                   <C>    <C>       <C>      <C>      <C>       <C>
Revenue.............................................  $ 339   $  209       62   $  585    $  402       46
Operating Expense...................................     90       44       NM      201       166       21
                                                    ----------------         -------------------
INCOME BEFORE TAXES.................................    249      165       51      384       236       63
Income Taxes........................................    191      263      (27)     439       465       (6)
 
NET INCOME (LOSS)...................................  $  58   ($  98)      NM   ($  55)    ($229)      76
                                                    ----------------         -------------------
 
Average Assets (In Billions of Dollars).............  $   9   $    9        -   $    9    $    8       13
---------------------------------------------------------------------------------------------------------
</TABLE>

(A)  Reclassified to conform to the latest quarter's presentation.
NM Not meaningful, as percentage equals or exceeds 100%.


Corporate Items includes revenue derived from charging businesses for funds
employed, based upon a marginal cost of funds concept, unallocated corporate
costs and the offset created by attributing income taxes to core business
activities on a local tax-rate basis.  Income taxes attributed to core
businesses on the basis of local tax rates resulted in effective tax rates for
the core businesses of 31% and 28% in the 1998 quarter and six months, and 23%
and 25% in the 1997 quarter and six months, primarily reflecting changes in the
nature and geographic mix of earnings.  Citicorp's effective tax rate was 37.5%
in both 1998 periods and in the 1997 six months, and  37% in the 1997 second
quarter.

Revenue in the 1998 second quarter and six months included $90 million and $109
million of gains on sales of investments held in the Corporate portfolio, while
the corresponding 1997 periods reflected investment writedowns of $29 million
and $49 million.  Expense in the 1998 second quarter and six months included a
$25 million and $50 million charge associated with performance-based stock
options granted in January 1998, and increases in certain technology expense and
other unallocated corporate costs.  The 1997 six months included a $72 million
charge associated with performance-based stock options which vested in that
period.


------------------------------------------------------------------------------
MANAGING GLOBAL RISK
------------------------------------------------------------------------------
Liquidity
------------------------------------------------------------------------------

Citicorp manages liquidity through a well-defined process described in the 1997
Annual Report and Form 10-K.

A diversity of funding sources, currencies, and maturities is used to gain a
broad practical access to the investor base.  Citicorp's deposits of $216.0
billion represented 65% of total funding at June 30, 1998, compared with $199.1
billion (64% of total funding) at December 31, 1997, and are broadly diversified
by both geography and customer segment.  Stockholders' equity, which was $21.7
billion at June 30, 1998, compared with $21.2 billion at December 31, 1997,
continues to be an important component of the overall funding structure.  In
addition, long-term debt is issued by Citicorp (the "Parent Company") and its
subsidiaries.  Total long-term debt outstanding at June 30, 1998, was $20.0
billion, compared with $19.8 billion at year-end 1997.

Asset securitization programs remain an important source of liquidity.  Total
consumer loans securitized during the quarter were $11.5 billion, including $8.6
billion of U.S. credit cards and $2.6 billion of U.S. mortgages.  Total consumer
loans securitized during the 1998 six months were $15.7 billion, including $11.1
billion of U.S. credit cards and $4.3 billion of U.S. mortgages.  As credit card
securitization transactions amortize, newly originated receivables are recorded
on Citicorp's balance sheet and become available for asset securitization.
During the three months ended June 30, 1998, the scheduled amortization of
certain credit card securitization transactions made available $2.5 billion of
new receivables 

18
<PAGE>
 
                                                              CITICORP [LOGO](R)

($4.3 billion for the six months). In addition, $3.5 billion and $3.8 billion of
credit card securitization transactions are scheduled to amortize during the
remainder of 1998 and in 1999, respectively.

The Parent Company is a legal entity separate and distinct from Citibank, N.A.
and its other subsidiaries and affiliates.  As discussed in the 1997 Annual
Report and Form 10-K, there are various legal limitations on the extent to which
Citicorp's subsidiaries may extend credit, pay dividends, or otherwise supply
funds to Citicorp.  As of June 30, 1998, under their applicable dividend
limitations, Citicorp's national and state-chartered bank subsidiaries could
have declared dividends to their respective parent companies without regulatory
approval of approximately $3.1 billion.  In determining whether and to what
extent to pay dividends, each bank subsidiary must also consider the effect of
dividend payments on applicable risk-based capital and leverage ratio
requirements, as well as policy statements of the federal regulatory agencies
that indicate that banking organizations should generally pay dividends out of
current operating earnings.  Consistent with these considerations, Citicorp
estimates that as of June 30, 1998, its bank subsidiaries could have distributed
dividends to Citicorp, directly or through their parent holding company, of
approximately $2.7 billion of the available $3.1 billion.

-------------------------------------------------------------------------------
MANAGEMENT OF PRICE RISK EXPOSURE
-------------------------------------------------------------------------------


Price risk is the risk to earnings from changes in interest rates, foreign
exchange rates, commodity and equity prices, and in their implied volatilities.
This exposure arises in the normal course of business of a global financial
intermediary.

Citicorp has established procedures for managing price risk which are described
in the 1997 Annual Report and Form 10-K.  These procedures include limits set
annually for each major category of risk; these limits are monitored and managed
by the businesses, and reviewed monthly at the corporate level.

Price risk is measured using various tools, including the Earnings-at-Risk
method, which is applied to interest rate risk of the non-trading portfolios,
and the Value-at-Risk method, which is applied to the trading portfolios.

-------------------------------------------------------------------------------
PRICE RISK IN NON-TRADING PORTFOLIOS
-------------------------------------------------------------------------------

Earnings-at-Risk measures the potential pretax earnings impact over a specified
time horizon of a specified parallel shift in the yield curve for the
appropriate currency.  The yield curve shift is statistically derived as a two
standard deviation change in a short-term interest rate over the period required
to defease the position (usually four weeks).  Earnings-at-Risk is calculated
separately for each currency, and reflects the repricing gaps in the position,
as well as option positions, both explicit and embedded.

Business units manage the potential earnings effect of interest rate movements
by modifying the asset and liability mix, either directly or through the use of
derivatives.  These include interest rate swaps and other derivative instruments
which are either designated and effective as hedges or designated and effective
in modifying the interest rate characteristics of specified assets or
liabilities.  The utilization of derivatives is managed in response to changing
market conditions as well as to changes in the characteristics and mix of the
related assets and liabilities.

Citicorp's non-trading price risk exposure is mainly to movements in U.S. dollar
interest rates, however recent interest rate volatility in certain Asian
countries has resulted in an increased measure of non-U.S. dollar  Earnings-at-
Risk.  As of June 30, 1998, the rate shift over a four week defeasance period
applied to the U.S. dollar yield curve for purposes of calculating Earnings-at-
Risk was 55 basis points.  As of June 30, 1998, the rate shifts applied to non-
U.S. currencies for purposes of calculating Earnings-at-Risk over a one to eight
week defeasance period ranged from 18 to 727 basis points, depending on the
currency.

                                                                              19
<PAGE>
 
                                                              CITICORP [LOGO](R)

The table below illustrates that as of June 30, 1998, a 55 basis point increase
in the U.S. dollar yield curve would have a potential negative impact on
Citicorp's pretax earnings of approximately $173 million in the next twelve
months, and approximately $61 million for the five year period 1998-2003.  A two
standard deviation increase in non-U.S. dollar interest rates would have a
potential negative impact on Citicorp's pretax earnings of approximately $81
million in the next twelve months, and approximately $171 million for the five
year period 1998-2003.

-------------------------------------------------------------------------------
EARNINGS-AT-RISK
-------------------------------------------------------------------------------
<TABLE> 
<CAPTION> 
                                                                     Assuming a U.S. Dollar     Assuming a Non-U.S. Dollar Rate
                                                                          Rate Move of                      Move of
                                                                  --------------------------------------------------------------
                                                                     Two Standard Deviations      Two Standard Deviations (A)
IMPACT ON PRETAX EARNINGS (In Millions of Dollars at June 30,         Increase     Decrease      Increase (B)      Decrease (B)
 1998)
--------------------------------------------------------------------------------------------------------------------------------
 
<S>                                                                 <C>           <C>          <C>               <C>
Overnight to Three Months.........................................         ($76)       $  83            ($  18)             $ 18
Four to Six Months................................................          (42)          54               (26)               26
Seven to Twelve Months............................................          (55)          69               (37)               37
                                                                  --------------------------------------------------------------
TOTAL OVERNIGHT TO TWELVE MONTHS..................................         (173)         206               (81)               81
Year Two..........................................................          (44)          48               (66)               66
Year Three........................................................            8          (10)              (15)               15
Year Four.........................................................           51          (54)              (10)               10
Year Five.........................................................          129         (147)              (25)               25
Effect of Discounting.............................................          (32)          35                26               (26)
                                                                  --------------------------------------------------------------
TOTAL.............................................................         ($61)       $  78             ($171)             $171
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(A)  Total assumes a two standard deviation increase or decrease for every
     currency, not taking into account any covariance between currencies.
(B)  Primarily results from Earnings-at-Risk in Thai baht, Singapore dollar, and
     Hong Kong dollar.
--------------------------------------------------------------------------------

The table below summarizes Citicorp's twelve month Earnings-at-Risk over recent
periods.

--------------------------------------------------------------------------------
TWELVE MONTH EARNINGS-AT-RISK (IMPACT ON PRETAX EARNINGS)
--------------------------------------------------------------------------------
<TABLE> 
<CAPTION> 
<S>                                            <C>        <C>             <C>        <C>        <C>             <C>
                                                           U.S. DOLLAR                         NON-U.S. DOLLAR
                                             ---------------------------------------------------------------------------
                                                  JUNE 30.      Dec. 31,  June 30,     JUNE 30,     Dec. 31,   June 30,
(In Millions of Dollars)                           1998          1997       1997        1998         1997      1997
------------------------------------------------------------------------------------------------------------------------
 
Assuming a Two Standard Deviation Rate:
  Increase...................................     ($173)          ($180)     ($205)      ($81)           ($25)      ($19)
  Decrease...................................       206             211        235         81              25         19
------------------------------------------------------------------------------------------------------------------------
</TABLE>


The tables above illustrate that Citicorp's pretax earnings in its non-trading
activities over the subsequent 12 months would be reduced by an increase in
interest rates and would benefit from a decrease in interest rates.  For the
U.S. dollar portfolio this primarily reflects the utilization of receive-fixed
interest rate swaps and similar instruments to effectively modify the repricing
characteristics of certain consumer and commercial loan portfolios, deposits,
and long-term debt.  Correspondingly, derivatives are not used extensively to
modify the repricing characteristics of the non-U.S. dollar portfolio.
Excluding the effects of these instruments, Citicorp's  twelve month Earnings-
at-Risk over recent periods would be as shown in the table on page 21:

20
<PAGE>
 
                                                              CITICORP [LOGO](R)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
TWELVE MONTH EARNINGS-AT-RISK (EXCLUDING EFFECTS OF DERIVATIVES)
-------------------------------------------------------------------------------
<S>                                                                                     <C>       <C>        <C>
                                                                                                 U.S. Dollar
                                                                                      -------------------------------
Impact on Pretax Earnings                                                               JUNE 30,  Dec. 31,   June 30,
(In Millions of Dollars)                                                                    1998      1997       1997
---------------------------------------------------------------------------------------------------------------------
 
Assuming a Two Standard Deviation Rate:
  Increase............................................................................     $  18     $  64      $  88
  Decrease............................................................................         6       (44)       (65)
---------------------------------------------------------------------------------------------------------------------
</TABLE>

(A)  Excluding the effects of derivatives, Citicorp's non-U.S. dollar Earnings-
     at-Risk would have had a negative impact of $91 million and $26 million
     assuming a two standard deviation increase in rates and a positive impact
     of $91 million and $27 million assuming a two standard deviation decrease
     in rates at June 30, 1998 and December 31, 1997 respectively.
-------------------------------------------------------------------------------

The first table on page 20 also illustrates that the risk profile in the one-to-
two year time horizon was directionally similar, but generally tends to reverse
in subsequent periods.  This reflects the fact that the majority of the
derivative instruments utilized to modify repricing characteristics as described
above will mature within three years.  Additional detail regarding these
derivative instruments may be found on page 43.

During the 1998 six months, the U.S. dollar Earnings-at-Risk for the following
12 months assuming a two standard deviation increase in rates would have had a
potential negative impact ranging from approximately $65 million to $173 million
in the aggregate at each month end, compared with a range from $142 million to
$209 million during 1997.  The relatively lower U.S. dollar Earnings-at-Risk
experienced during the 1998 six months was primarily due to the reduction in the
level of received-fixed swaps, offset slightly by the acquisition of UCS.  A two
standard deviation increase in non-U.S. dollar interest rates for the following
twelve months would have had a potential negative impact ranging from
approximately $53 million to $85 million in the aggregate at each month-end
during the 1998 six months, compared with a range from $15 million to $33
million during 1997.  The higher non-U.S. dollar Earnings-at-Risk experienced
during the 1998 six months primarily reflected the higher interest rate
volatility seen across the Asia Pacific region.

-------------------------------------------------------------------------------
PRICE RISK IN TRADING PORTFOLIOS
-------------------------------------------------------------------------------

The price risk of trading activities is measured using the Value-at-Risk method,
which estimates, at a 99% confidence level, the largest potential loss in pretax
market value that could occur over a one day holding period.  The Value-at-Risk
method incorporates the market factors to which the market value of the trading
position is exposed (interest rates, foreign exchange rates, equity and
commodity prices, and their implied volatilities), the sensitivity of the
position to changes in those market factors, and the volatilities and
correlation of those factors.  The Value-at-Risk measurement includes the
foreign exchange risks that arise in traditional banking businesses as well as
in explicit trading positions.

The aggregate pretax Value-at-Risk in the trading portfolios was $16 million at
June 30, 1998, and daily exposures averaged $19 million in the 1998 second
quarter for Citicorp's major trading centers and ranged from $14 million to $22
million.  The level of exposure taken depends on the market environment and
expectations of future price and market movements, and will vary from period to
period.  The trading-related revenue for the 1998 second quarter was $730
million, compared with $728 for the 1998 first quarter and $347 million for the
1997 fourth quarter.

                                                                              21
<PAGE>
 
                                                              CITICORP [LOGO](R)

The table below summarizes Citicorp's Value-at-Risk in its trading portfolio as
of June 30, 1998.


<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
VALUE-AT-RISK
-------------------------------------------------------------------------------
                                                                                 
                                                                                1998 SECOND                                 
(In Millions of Dollars)                                     JUNE 30,          QUARTER DAILY        Dec. 31, 
                                                              1998              AVERAGE              1997 
----------------------------------------------------------------------------------------------------------
                                                            
<S>                                                          <C>             <C>             <C>
Interest Rate...............................................          $ 14            $ 17            $ 23
Foreign Exchange............................................             6               7               8
All Other (primarily Equity and Commodity)..................             8               7               8
Covariance Adjustment.......................................           (12)            (12)            (14)
                                                            ----------------------------------------------
TOTAL.......................................................          $ 16            $ 19            $ 25
----------------------------------------------------------------------------------------------------------
</TABLE>

-------------------------------------------------------------------------------
MANAGEMENT OF CROSS-BORDER RISK
-------------------------------------------------------------------------------


Cross-border risk is the risk that Citicorp will be unable to obtain payment
from customers on their contractual obligations as a result of actions taken by
foreign governments such as exchange controls, debt moratorium, and restrictions
on the remittance of funds.  Citicorp manages cross-border risk as part of the
Windows on Risk process described in the 1997 Annual Report and Form 10-K.

The table on page 23 presents total cross-border outstandings on a regulatory
basis in accordance with Federal Financial Institutions Examination Council
("FFIEC") guidelines.  Total cross-border outstandings include cross-border
claims on third parties as well as investments in and funding of local
franchises.

Cross-border claims on third parties (trade, short-term, and medium- and long-
term claims) include cross-border loans, securities, deposits at interest with
banks, investments in affiliates, and other monetary assets, as well as net
revaluation gains on foreign exchange and derivative products.  Adjustments have
been made to assign externally guaranteed outstandings to the country of the
guarantor and outstandings for which tangible, liquid collateral is held outside
of the obligor's country to the country in which the collateral is held.  For
securities received as collateral, outstandings are assigned to the domicile of
the issuer of the securities.

Investments in and funding of local franchises represents the excess of local
country assets over local country liabilities, as defined by the FFIEC.  Local
country assets are claims on local residents recorded by branches and majority-
owned subsidiaries of Citicorp domiciled in the country, adjusted for externally
guaranteed outstandings and certain collateral.  Local country liabilities are
obligations of branches and majority-owned subsidiaries of Citicorp domiciled in
the country for which no cross-border guarantee is issued by Citicorp offices
outside the country.

22
<PAGE>
 
                                                              CITICORP [LOGO](R)

------------------------------------------------------------------------------
CROSS-BORDER OUTSTANDINGS AND COMMITMENTS
------------------------------------------------------------------------------
<TABLE> 
<CAPTION> 
                                                               JUNE 30, 1998                                     December 31, 1997
                    --------------------------------------------------------------------------------------------------------------
                          CROSS-BORDER CLAIMS ON THIRD PARTIES
                    -----------------------------------------------
(In Billions of                                              INVESTMENTS IN                                       
Dollars)                                         TRADING AND AND FUNDING OF   TOTAL                         TOTAL 
                  ------------------------------- SHORT-TERM    LOCAL       CROSS-BORDER                  CROSS-BORDER
                    BANKS  PUBLIC PRIVATE TOTAL   CLAIMS (A) FRANCHISES     OUTSTANDINGS  COMMITMENTS (B) OUTSTANDINGS COMMITMENTS
                                                                                                                          (B)
--------------------------------------------------------------------------------------------------------------------------------
<S>                   <C>    <C>     <C>      <C>    <C>              <C>              <C>            <C>              <C>   <C>
                                                                                                                         
United Kingdom....  $ 1.2   $0.2  $ 2.7  $ 4.1     $ 2.9       $   -         $ 4.1 (C)        $ 9.2         $  4.5 (C)     $ 7.8
Germany...........    1.0    1.3    0.5    2.8       2.6         1.3           4.1 (C)          1.6            4.7 (C)       1.7
Italy.............    0.5    0.1    0.4    1.0       0.5         2.6           3.6 (C)          0.5            3.4 (C)       0.5
France............    1.9    0.5    0.8    3.2       2.7         0.3           3.5 (C)          1.0            3.1 (C)       0.6
Japan.............    2.3    0.3    0.8    3.4       2.5           -           3.4 (C)          0.7            3.2 (C)       1.1
Switzerland.......    1.7      -    1.5    3.2       2.7           -           3.2 (D)          1.2            2.7 (D)       1.1
Spain.............    0.2      -    0.3    0.5       0.4         1.8           2.3              0.2            2.3 (D)       0.4
Netherlands.......    0.6    0.2    1.1    1.9       1.5         0.2           2.1              0.8            2.2           0.8
Belgium...........    0.5    0.2    0.6    1.3       1.2         0.5           1.8              0.2            0.9           0.2
Sweden............    0.8    0.3    0.5    1.6       1.1         0.1           1.7              0.8            1.1           0.7
Canada............    0.9    0.1    0.4    1.4       0.8           -           1.4              1.3            1.6           1.8
Finland...........    0.3    0.1    0.4    0.8       0.5           -           0.8              0.5            0.7           0.4
Other (23 countries                                                                                                      
  in 1998)........    1.4    0.4    2.2    4.0       2.5         0.5           4.5              1.9            4.0           1.6
--------------------------------------------------------------------------------------------------------------------------------
EUROPE, CANADA,                                                                                                          
  AND JAPAN.......   13.3    3.7   12.2   29.2      21.9         7.3          36.5             19.9           34.4          18.7
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                                         
Brazil............    0.4    1.0    1.2    2.6       1.5         1.8          4.4 (C)           0.1           4.4 (C)        0.1
Mexico............    0.2    1.9    0.8    2.9       1.3         0.5          3.4 (C)           0.3           3.0 (D)        0.6
Argentina.........    0.2    0.2    1.0    1.4       0.7         0.9           2.3              0.3            2.2           0.1
Chile.............      -    0.2    0.4    0.6       0.2         0.4           1.0              0.4            1.0             -
Venezuela.........    0.1    0.7    0.2    1.0       0.4           -           1.0              0.1            1.0             -
Colombia..........    0.2    0.1    0.2    0.5       0.3         0.4           0.9              0.1            0.9           0.1
Peru..............    0.1    0.1    0.2    0.4       0.3           -           0.4              0.2            0.4           0.1
Uruguay...........      -    0.3    0.1    0.4       0.1           -           0.4                -            0.3             -
Other (20 countries                                                                                                      
  in 1998)........    0.1    0.1    1.2    1.4       1.1         0.3           1.7              0.4            1.1           0.6
--------------------------------------------------------------------------------------------------------------------------------
LATIN AMERICA.....    1.3    4.6    5.3   11.2       5.9         4.3          15.5              1.9           14.3           1.6
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                                         
South Korea.......    0.6    0.3    0.7    1.6       1.2         0.9           2.5 (D)          0.5            2.6 (D)       0.2
Saudi Arabia......    0.6      -    0.2    0.8       0.3           -           0.8              0.5            0.8           0.3
Malaysia..........    0.1      -    0.2    0.3       0.2         0.3           0.6              0.1            0.7           0.1
Singapore.........    0.3      -    0.3    0.6       0.4           -           0.6              0.4            0.5           0.3
Taiwan............    0.1      -    0.3    0.4       0.3         0.1           0.5              0.6            0.4           0.5
Indonesia.........      -      -    0.5    0.5       0.4           -           0.5              0.1            0.6           0.2
Hong Kong.........    0.1      -    0.2    0.3       0.2           -           0.3              0.3            0.7           0.3
Kuwait............    0.2      -      -    0.2       0.2           -           0.2                -            0.2             -
India.............      -      -    0.2    0.2       0.1           -           0.2              0.4            0.2           0.3
China.............      -      -    0.1    0.1       0.1         0.1           0.2              0.4            0.6           0.4
Pakistan..........    0.1      -      -    0.1       0.1         0.1           0.2                -            0.2             -
Philippines.......      -      -    0.2    0.2       0.2           -           0.2              0.1            0.2           0.1
Thailand..........      -      -    0.2    0.2       0.2           -           0.2              0.1            0.3           0.1
Bahrain...........    0.1      -      -    0.1       0.1           -           0.1              0.1            0.3           0.1
Other (11 countries                                                                                                      
  in 1998)........      -    0.1      -    0.1       0.1           -           0.1              0.3            0.3           0.4
--------------------------------------------------------------------------------------------------------------------------------
ASIA/MIDDLE EAST      2.2    0.4    3.1    5.7       4.1         1.5           7.2              3.9            8.6           3.3
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                                         
Australia.........    0.3      -    0.4    0.7       0.5         0.9           1.6              0.1            0.7           0.4
New Zealand.......      -      -    0.2    0.2       0.1         0.5           0.7                -            0.7             -
All Other.........      -    0.7    0.1    0.8       0.3         0.5           1.3              0.5            1.5           0.4
--------------------------------------------------------------------------------------------------------------------------------
TOTAL OTHER.......    0.3    0.7    0.7    1.7       0.9         1.9           3.6              0.6            2.9           0.8
--------------------------------------------------------------------------------------------------------------------------------
TOTAL CITICORP....  $17.1   $9.4  $21.3  $47.8     $32.8       $15.0         $62.8            $26.3          $60.2         $24.4
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(A)  Included in total cross-border claims on third parties.
(B)  Commitments (not included in total cross-border outstandings) include
     legally binding cross-border letters of credit and loan commitments.
(C)  Total cross-border outstandings were in excess of 1.0% of total assets at
     the end of the respective periods.
(D)  Total cross-border outstandings were between 0.75% and 1.0% of total assets
     at the end of the respective periods.
--------------------------------------------------------------------------------

                                                                              23
<PAGE>
 
                                                             CITICORP [LOGO] (R)

Details of investments in and funding of local franchises for selected Asian
countries included in the table on page 23 at June 30, 1998 were as follows:


<TABLE>
<CAPTION>
                                                                                                
                                                 Local Country Assets (A)                        
                                                                                                 
                ---------------------------------------------------------------------------------
                                            GROSS                                                
                                         UNREALIZED                                              
                                          GAINS ON                                               
                                       DERIVATIVE AND                                            
In Billions of                             FOREIGN                                 LOCAL COUNTRY 
Dollars at        CONSUMER  COMMERCIAL    EXCHANGE      ALL OTHER                     ASSETS     
June 30, 1998      LOANS      LOANS       CONTRACTS     ASSETS (C)  ADJUSTMENTS (D)              
-------------------------------------------------------------------------------------------------
<S>               <C>       <C>         <C>              <C>         <C>              <C>        
South Korea.....  $1.0        $1.8       $0.4           $2.0        ($0.5)             $4.7      
Malaysia........   1.3         0.8        0.2            1.0         (0.4)              2.9      
Indonesia.......   0.1         0.4        0.1            0.7         (0.3)              1.0      
Philippines.....   0.3         0.9          -            1.6         (0.5)              2.3      
Thailand........   1.0         0.9        0.2            0.7         (0.2)              2.6      
-------------------------------------------------------------------------------------------------
</TABLE> 


  LOCAL COUNTRY
  LIABILITIES (B)
----------------------------
                   GROSS
                 UNREALIZED
                  LOSSES ON
                  DERIVATIVE AND                        INVESTMENTS IN
In Billions of     FOREIGN        ALL OTHER LOCAL       AND FUNDING OF
Dollars at         EXCHANGE      COUNTRY LIABILITIES    LOCAL FRANCHISES
June 30, 1998     CONTRACTS             (E)
-----------------------------------------------------------------------------

South Korea.....       $0.4          $3.4                   $0.9
Malaysia........        0.1           2.5                    0.3
Indonesia.......        0.1           0.9                      -
Philippines.....          -           2.3                      -
Thailand........        0.2           2.4                      -
-----------------------------------------------------------------------------

(A)  At December 31, 1997, local country assets were $4.5 billion in South
     Korea, $3.4 billion in Malaysia, $2.0 billion in Indonesia,  $2.2 billion
     in Philippines, and  $2.7 billion in Thailand.
(B)  At December 31, 1997, local country liabilities were $3.4 billion in South
     Korea, $3.0 billion in Malaysia, $2.2 billion in Indonesia,  $2.2 billion
     in Philippines, and  $3.0 billion in Thailand.
(C)  Includes deposits at interest with banks, securities, customers' acceptance
     liability, and other monetary assets.
(D)  Adjustments include externally guaranteed outstandings, locally booked
     claims on nonresidents, and certain other claims as defined by the FFIEC.
(E)  Primarily deposits, purchased funds and other borrowings, and acceptances
     outstanding.


On January 28, 1998, an agreement was reached between the Republic of Korea and
a group of international banks (including Citicorp) on a plan to extend the
maturities of short-term credits to the Korean banking system.  On April 8,
1998, Korean banks exchanged $21.75 billion of their short-term cross-border
credits for new loans with maturities of one-, two-, or three-years, guaranteed
by the Republic of Korea, and bearing a floating rate of interest at rates of
2.25%, 2.50%, and 2.75%, respectively, over the six-month London Interbank
Offering Rate (LIBOR).  Of the total, $3.76 billion was exchanged into one-year
loans, $9.79 billion into two-year loans, and $8.2 billion into three-year
loans.

Under the plan, Citicorp exchanged $398 million of short-term loans to Korean
banks for new loans with maturities of one, two, and three years.

-------------------------------------------------------------------------------
ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
-------------------------------------------------------------------------------

The table on page 25 presents the estimated fair value in excess of (less than)
carrying value of Citicorp's financial instruments as defined in accordance with
applicable requirements, including financial assets and liabilities recorded on
the balance sheet as well as off-balance sheet instruments such as derivative
and foreign exchange contracts and credit card securitizations.  To better
reflect Citicorp's values subject to market risk and to illustrate the
interrelationships that characterize risk management strategies, the table on
page 25 also provides estimated fair value data for the expected time period
until runoff of existing deposits with no fixed maturity.

24
<PAGE>
 
                                                             CITICORP [LOGO] (R)
<TABLE> 
<CAPTION> 
-------------------------------------------------------------------------------
ESTIMATED FAIR VALUE IN EXCESS OF (LESS THAN) CARRYING VALUE
-------------------------------------------------------------------------------
                                                             JUNE 30,   Mar. 31,   Dec. 31,   Sept. 30,   June 30,
(In Billions of Dollars)                                       1998       1998       1997        1997       1997
------------------------------------------------------------------------------------------------------------------
 
<S>                                                          <C>        <C>        <C>        <C>         <C>
Assets and Liabilities.....................................     $ 6.6      $ 6.3      $ 6.2       $ 6.2      $ 6.2
End-User Derivative and Foreign Exchange Contracts.........       0.9        0.7        0.7         0.5        0.1
Credit Card Securitizations (A)............................      (0.3)      (0.3)      (0.3)       (0.2)       0.1
                                                           -------------------------------------------------------
                                                                  7.2        6.7        6.6         6.5        6.4
Deposits with No Fixed Maturity (B)........................       3.3        3.3        3.3         2.9        3.0
                                                           -------------------------------------------------------
TOTAL......................................................     $10.5      $10.0      $ 9.9       $ 9.4      $ 9.4
------------------------------------------------------------------------------------------------------------------
</TABLE>

(A)  Reflects the estimated (shortfall) excess in fair value of the various
     components of these transactions, but principally arises from fixed rates
     payable to certificate holders.
(B)  Represents the estimated excess fair value related to the expected time
     period until runoff of existing deposits with no fixed maturity on the
     balance sheet, without assuming any regeneration of balances, based on the
     estimated difference between the cost of funds on these deposits and the
     cost of funds from alternative sources.
--------------------------------------------------------------------------------

The quarterly fluctuations among financial instruments are typically due to
changes in the interest rate environment in the U.S. and other countries.
During the 1998 second quarter, U.S. interest rates continued to decline, as
they have done for the past year.  Generally in declining interest rate
environments, the fair value of Citicorp's assets and liabilities, deposits with
no fixed maturity, and credit card securitizations (primarily fixed rate
investor certificates) tend to decline, while the value of derivative contracts
tend to increase.  However, fair values can also vary from period to period
based on changes in a variety of other factors including credit quality, market
perceptions of value, and the changing composition of assets and liabilities,
which in the 1998 second quarter more than offset the impact of the declining
rate environment.

-------------------------------------------------------------------------------
CAPITAL
-------------------------------------------------------------------------------

Citicorp is subject to risk-based capital guidelines issued by the Federal
Reserve Board ("FRB").  These guidelines are supplemented by a leverage ratio
requirement.  The risk-based capital guidelines and the leverage ratio
requirement are detailed in the 1997 Annual Report and Form 10-K.


<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                                                                                        June 30,   Mar. 31,   Dec. 31,
CITICORP RATIOS                                                                           1998       1998       1997
----------------------------------------------------------------------------------------------------------------------
<S>                                                                                     <C>        <C>        <C>
Tier 1 Capital........................................................................      8.29%      8.26%      8.34%
Total Capital (Tier 1 and Tier 2).....................................................     12.05      12.13      12.31
Leverage (A)..........................................................................      6.73       6.83       7.01
Common Stockholders' Equity...........................................................      6.18       6.01       6.21
----------------------------------------------------------------------------------------------------------------------
</TABLE>

(A)  Tier 1 capital divided by adjusted average assets.
-------------------------------------------------------------------------------

Citicorp continued to maintain a strong capital position during the 1998 second
quarter.  Total capital (Tier 1 and Tier 2) amounted to $31.8 billion at June
30, 1998, representing 12.05% of net risk-adjusted assets.  This compares with
$31.2 billion and 12.13% at March 31, 1998 and $31.2 billion and 12.31% at
December 31, 1997.  Tier 1 capital of $21.9 billion at June 30, 1998 represented
8.29% of net risk-adjusted assets, compared with $21.3 billion and 8.26% at
March 31, 1998 and $21.1 billion and 8.34% at December 31, 1997.  The Tier 1
capital ratio at June 30, 1998 was within Citicorp's target range of 8.00% to
8.30%.

The excess of Tier 1 capital generated during a period reduced by capital
utilized for business expansion is referred to as "free capital."  As shown in
the table below, Citicorp generated $366 million of free capital during the 1998
six months, 

                                                                              25
<PAGE>
 
                                                             CITICORP [LOGO] (R)

compared with $735 million for the 1997 six months. The amount of free capital
is impacted by a number of factors including the level of income, issuances,
dividends, and changes in risk-adjusted assets.


                                                             CITICORP [LOGO] (R)

-------------------------------------------------------------------------------
FREE CAPITAL
-------------------------------------------------------------------------------
<TABLE> 
<CAPTION> 
                                                                                                         SIX MONTHS
                                                                                                    ------------------
(In Millions of Dollars)                                                                               1998      1997
----------------------------------------------------------------------------------------------------------------------
<S>                                                                                                   <C>      <C>
Tier 1 Capital Generated:
Net Income..........................................................................................  $2,162   $ 2,019
Issuances/Other (A).................................................................................    (309)      599
Cash Dividends Declared.............................................................................    (580)     (556)
                                                                                                    ------------------
Total Tier 1 Capital Generated......................................................................   1,273     2,062
Capital Utilized for Growth in Net Risk-Adjusted Assets.............................................    (907)   (1,327)
                                                                                                    ------------------
FREE CAPITAL GENERATED..............................................................................  $  366   $   735
----------------------------------------------------------------------------------------------------------------------
</TABLE>

(A)  Includes issuance of common stock under various employee benefit plans and
     the dividend reinvestment plan.  During 1998, Citicorp redeemed $325
     million of Noncumulative Preferred Stock, Series 16, and $303 million of
     Adjustable Rate Preferred Stock, Second and Third Series, and issued an
     additional $225 million of guaranteed preferred beneficial interests in
     subordinated debt.  1997 reflects the issuance of $450 million of
     guaranteed preferred beneficial interests in subordinated debt and the
     redemption of $175 million of Series 14 Preferred Stock.
------------------------------------------------------------------------------

In order to return available free capital to its shareholders, Citicorp
initiated a common stock repurchase program in June 1995.  Citicorp repurchased
4.0 million and 10.8 million shares of common stock under the repurchase program
in the six months of 1998 and 1997, using capital of $483 million ($122.28
average cost per share) and $1.2 billion ($113.66 average cost per share),
respectively.  During the second quarter, no shares were repurchased due to the
suspension of the stock repurchase program in connection with the announced
agreement to merge with Travelers Group.  Total repurchases since the program
was inaugurated on June 20, 1995 were 82.0 million shares for an outlay of $7.3
billion.

Common stockholders' equity increased a net $571 million during the second
quarter of 1998 to $20.4 billion at June 30, 1998, representing 6.18% of assets,
compared with 6.01% at March 31, 1998 and 6.21% at December 31, 1997.  The
increase in common stockholders' equity during the quarter principally reflected
net income and the issuance of stock under various employee benefit plans,
partially offset by a decrease in net unrealized gains on securities available
for sale and dividends declared on common and preferred stock.

During the second quarter of 1998, Citicorp redeemed $325 million of its 8%
Noncumulative Preferred Stock, Series 16 and issued an additional $225 million
of guaranteed preferred beneficial interests (commonly known as "trust preferred
securities"). The $975 million of guaranteed preferred beneficial interests
outstanding at June 30, 1998 qualify as Tier 1 capital, and are included in
long-term debt on the balance sheet.  For the six months ended June 30, 1998,
interest expense on the guaranteed preferred beneficial interests amounted to
$30 million, compared with $28 million for the 1997 six month period.  During
the first quarter of 1998, Citicorp redeemed $303 million of Adjustable Rate
Preferred Stock, Second and Third Series.

In July 1998, Citicorp announced that in August 1998 it will redeem for cash all
outstanding shares of its  Graduated Rate Cumulative Preferred Stock, Series 8A,
and that in September 1998 it will redeem for cash all outstanding shares of its
7.5% Noncumulative Preferred Stock, Series 17.

26
<PAGE>
 
                                                             CITICORP [LOGO] (R)
-------------------------------------------------------------------------------
COMPONENTS OF CAPITAL UNDER REGULATORY GUIDELINES
-------------------------------------------------------------------------------
<TABLE> 
<CAPTION> 
                                                                                        JUNE 30,   March 31,   Dec. 31,
(In Millions of Dollars)                                                                  1998        1998       1997
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                                     <C>        <C>         <C>
TIER 1 CAPITAL
Common Stockholders' Equity...........................................................  $ 20,442    $ 19,871   $ 19,293
Perpetual Preferred Stock.............................................................     1,275       1,600      1,903
Guaranteed Preferred Beneficial Interests in Subordinated Debt........................       975         750        750
Minority Interest.....................................................................       107         104        104
Less: Net Unrealized Gains  --  Securities Available for Sale (A).....................      (308)       (661)      (535)
  Intangible Assets (B)...............................................................      (507)       (296)      (304)
  50% Investment in Certain Subsidiaries (C)..........................................       (98)        (98)      (115)
                                                                                      ---------------------------------
TOTAL TIER 1 CAPITAL..................................................................    21,886      21,270     21,096
                                                                                      ---------------------------------
 
TIER 2 CAPITAL
Allowance for Credit Losses (D).......................................................     3,337       3,254      3,198
Qualifying Debt (E)...................................................................     6,669       6,802      6,977
Less: 50% Investment in Certain Subsidiaries (C)......................................       (97)        (97)      (115)
                                                                                      ---------------------------------
TOTAL TIER 2 CAPITAL..................................................................     9,909       9,959     10,060
                                                                                      ---------------------------------
 
TOTAL CAPITAL (TIER 1 AND TIER 2).....................................................  $ 31,795    $ 31,229   $ 31,156
Net Risk-Adjusted Assets (F)..........................................................  $263,925    $257,545   $252,999
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

(A)  Tier 1 capital excludes unrealized gains and losses on securities available
     for sale in accordance with regulatory risk-based capital guidelines.
(B)  Includes goodwill and certain other identifiable intangible assets.  The
     increase during the 1998 second quarter was primarily attributable to the
     acquisition of a global trust and agency services business.
(C)  Represents investment in certain overseas insurance activities.
(D)  Includable up to 1.25% of risk-adjusted assets.  Any excess allowance is
     deducted from risk-adjusted assets.
(E)  Includes qualifying senior and subordinated debt in an amount not exceeding
     50% of Tier 1 capital, and subordinated capital notes subject to certain
     limitations.
(F)  Includes risk-weighted credit equivalent amounts net of applicable
     bilateral netting agreements of $14.1 billion for interest rate, commodity
     and equity derivative contracts and foreign exchange contracts, as of June
     30, 1998, compared with $13.6 billion as of March 31, 1998 and $13.7
     billion as of December 31, 1997.  Net risk-adjusted assets also includes
     the effect of other off-balance sheet exposures such as unused loan
     commitments and letters of credit and reflects deductions for intangible
     assets and any excess allowance for credit losses.
--------------------------------------------------------------------------------

On January 1, 1998, Citicorp adopted the U.S. bank regulatory agencies amendment
to their risk-based capital guidelines to incorporate market risk in the
measurement of net risk-adjusted assets.  The adoption of the market risk
guidelines did not have a significant impact on net risk-adjusted assets.

As discussed in the 1997 Annual Report and Form 10-K, Citicorp has entered into
forward purchase agreements on its common stock, to be settled on a net basis,
in order to partially offset the dilutive effects of various employee benefit
plans.  At Citicorp's option, such settlements may be made in shares of
Citicorp's common stock or in cash.  Both the number of shares covered and the
forward prices of these contracts are adjusted on a quarterly basis and reflect
the stock price at the time of adjustment.  During the 1998 second quarter,
settlements of forward purchase agreements resulted in Citicorp receiving
approximately 1.4 million shares of its common stock.  In connection with the
announced agreement to merge with Travelers Group, Citicorp has terminated these
agreements in accordance with their contractual terms.

Citicorp's subsidiary depository institutions are subject to the risk-based
capital guidelines issued by their respective primary federal bank regulatory
agencies, which are generally similar to the FRB's guidelines.  At June 30,
1998, all of Citicorp's subsidiary depository institutions were "well
capitalized" under the federal bank regulatory agencies' definitions.

                                                                              27
<PAGE>
 
                                                             CITICORP [LOGO] (R)
<TABLE> 
<CAPTION> 
----------------------------------------------------------------------------------------------------------------------
                                                                                        JUNE 30,   Mar. 31,   Dec. 31,
CITIBANK, N.A. RATIOS                                                                     1998       1998       1997
----------------------------------------------------------------------------------------------------------------------
<S>                                                                                     <C>        <C>        <C>
Tier 1 Capital........................................................................      7.96%      8.07%      8.18%
Total Capital (Tier 1 and Tier 2).....................................................     11.73      11.94      12.16
Leverage..............................................................................      6.17       6.31       6.39
Common Stockholder's Equity...........................................................      6.37       6.31       6.54
----------------------------------------------------------------------------------------------------------------------
</TABLE>


The decline in Citibank's regulatory capital ratios during the 1998 second
quarter principally reflects the acquisition of UCS on April 2, 1998.

From time to time, the FRB and the Federal Financial Institutions Examination
Council propose amendments to, and issue interpretations of, risk-based capital
guidelines and reporting instructions.  Such proposals or interpretations could,
if implemented in the future, affect reported capital ratios and net risk-
adjusted assets.


<TABLE>
<CAPTION>
STATEMENT OF INCOME ANALYSIS
-----------------------------------------------------------------------------------------------------------------
Net Interest Revenue (Taxable Equivalent Basis)                                       (A)
-----------------------------------------------------------------------------------------------------------------
                                                             2nd Qtr.   1st Qtr.   4th Qtr.   3rd Qtr.   2nd Qtr.
                                                               1998       1998       1997       1997       1997
-----------------------------------------------------------------------------------------------------------------
<S>                                                          <C>        <C>        <C>        <C>        <C>
NET INTEREST REVENUE
(In Millions of Dollars)
Interest Revenue...........................................    $6,672     $6,320     $6,302     $6,207     $6,154
Interest Expense...........................................     3,663      3,464      3,431      3,319      3,278
                                                           ------------------------------------------------------
NET INTEREST REVENUE.......................................     3,009      2,856      2,871      2,888      2,876
Effect of Credit Card Securitization Activity..............       908        640        596        565        578
                                                           ------------------------------------------------------
TOTAL ADJUSTED (B).........................................    $3,917     $3,496     $3,467     $3,453     $3,454
-----------------------------------------------------------------------------------------------------------------
 
AVERAGE INTEREST-EARNING ASSETS
(In Billions of Dollars)
TOTAL......................................................    $276.0     $265.2     $257.0     $255.7     $252.6
Effect of Credit Card Securitization Activity..............      36.8       27.4       26.3       24.8       24.7
                                                           ------------------------------------------------------
TOTAL ADJUSTED (B).........................................    $312.8     $292.6     $283.3     $280.5     $277.3
-----------------------------------------------------------------------------------------------------------------
 
NET INTEREST MARGIN (%)
Total......................................................      4.37%      4.37%      4.43%      4.48%      4.57%
Effect of Credit Card Securitization Activity..............       .65%       .48%       .42%       .40%       .43%
                                                           ------------------------------------------------------
TOTAL ADJUSTED (B).........................................      5.02%      4.85%      4.85%      4.88%      5.00%
-----------------------------------------------------------------------------------------------------------------
</TABLE>

(A)  The taxable equivalent adjustment is based on the U.S. federal statutory
     tax rate of 35%.
(B)  See page 35 for discussion of the effect of credit card securitization
     activity.

--------------------------------------------------------------------------------

Net interest revenue and net interest margin for all periods presented were
reduced by the effect of credit card securitization activity.  Adjusted for the
effect of credit card securitization activity, net interest revenue of $3.917
billion increased 12% from the 1998 first quarter and 13% from the 1997 second
quarter.  The adjusted net interest margin increased  from the 1998 first
quarter, but remained relatively unchanged from the 1997 second quarter.  These
improvements in net interest revenue and the net interest margin from both
periods reflected the addition of UCS, as well as an increase  due to risk-based
pricing strategies in U.S. bankcards.

Net interest revenue of $3.009 billion in the 1998 second quarter increased 5%
from both the 1998 first quarter and 1997 second quarter, primarily reflecting
the acquisition of the UCS portfolio in the current quarter as well as an
increase in other average interest-earning assets, and was reduced by increased
levels of securitization.  The change from the 1997 second quarter also
reflected a decline in the net interest margin primarily from reduced yields
earned on assets.

28
<PAGE>
 
                                                             CITICORP [LOGO] (R)

Excluding UCS, net interest revenue compared to both periods reflected increased
business volumes across most regions, especially in Global Corporate Banking.
The increase from the 1998 first quarter also reflected the impact of one more
day in the current quarter, partially offset by a slightly lower net interest
margin.  The improvement from the year ago quarter also reflected increases in
Global Corporate Banking, including trading-related net interest revenue, offset
by lower spreads in the Global Consumer businesses in Latin America and Asia
Pacific, as well as the effect of foreign currency translation.

Interest revenue improved $352 million or 6% from the 1998 first quarter,
primarily resulting from the addition of the UCS portfolio ($187 million);
increased loan volumes in Global Corporate Banking in Latin America, Europe, and
CEEMEA; as well as the impact of one more day in the 1998 second quarter.
Interest revenue improved $518 million or 8% from the 1997 second quarter,
principally from higher loan volumes at higher rates in Emerging Markets, and
from the addition of UCS and higher loan volumes in the Global Consumer
businesses in North America and Latin America.  These improvements were
partially offset by a decline in revenue resulting from increased levels of
securitization activity.

Interest expense increased $199 million or 6% from the 1998 first quarter,
primarily from the addition of the UCS portfolio ($81 million) and from
increased time deposit volumes in Global Corporate Banking in Europe.  Interest
expense increased $385 million or 12% from the 1997 second quarter, primarily
resulting from increased time deposit volumes across most global markets, and
from increased rates paid in Emerging Markets and the addition of UCS, partially
offset by a decline in purchased fund volumes and other borrowings in U.S.
bankcards.


<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------- 
FEE AND COMMISSION REVENUE
---------------------------------------------------------------------------------------------------------- 
                                                       SECOND QUARTER       %        SIX MONTHS        %
                                                    ------------------         ------------------
(In Millions of Dollars)                               1998    1997 (A)  Change    1998   1997 (A)  Change
----------------------------------------------------------------------------------------------------------
 
GLOBAL CONSUMER
<S>                                                   <C>      <C>       <C>      <C>     <C>       <C>
Citibanking.........................................  $  314    $  308        2   $  614   $  590        4
Cards (B)...........................................     600       491       22    1,083      964       12
Private Bank........................................     133       117       14      251      229       10
 
TOTAL GLOBAL CONSUMER (B)...........................   1,047       916       14    1,948    1,783        9
GLOBAL CORPORATE BANKING AND OTHER..................     528       502        5    1,027      956        7
 
TOTAL ADJUSTED......................................   1,575     1,418       11    2,975    2,739        9
Effect of Credit Card Securitization Activity.......     (22)       23       NM       19       54      (65)
                                                    ------------------         ------------------
TOTAL...............................................  $1,553    $1,441        8   $2,994   $2,793        7
----------------------------------------------------------------------------------------------------------
 
SUPPLEMENTAL INFORMATION
Global Consumer Businesses in:
  Emerging Markets..................................  $  279    $  300       (7)  $  549   $  588       (7)
  Developed Markets.................................     768       616       25    1,399    1,195       17
                                                    ------------------         ------------------
TOTAL GLOBAL CONSUMER...............................  $1,047    $  916       14   $1,948   $1,783        9
----------------------------------------------------------------------------------------------------------
</TABLE>

(A)  Reclassified to conform to latest quarter's presentation.
(B)  See page 35 for discussion of the effect of credit card securitization
     activity.
NM   Not meaningful, as percentage equals or exceeds 100%.
------------------------------------------------------------------------------- 

Total fee and commission revenue of $1.6 billion in the 1998 second quarter and
$3.0 billion for the 1998 six months increased $112 million or 8% and $201
million or 7% from the comparable 1997 periods.  The effect of credit card
securitization decreased fee and commission revenue in the 1998 second quarter,
and increased it in all other periods.  Adjusted fee and commission revenue in
the second quarter of $1.6 billion and in the six months of $3.0 billion was up
$157 million or 11% and $236 million or 9% from the comparable 1997 periods.

                                                                              29
<PAGE>
 
                                                             CITICORP [LOGO] (R)
Global Consumer fee and commission revenue was up $131 million or 14% (up $34
million or 4% excluding UCS) in the second quarter and $165 million or 9% in the
six months.  Growth in fee revenue in the 1998 second quarter was led by a 9%
increase in the developed markets, excluding UCS, principally in U.S. bankcards
and the Private Bank, and was partially offset by a 7% decrease in the emerging
markets, principally Asia Pacific Cards, including the effect of foreign
currency translation.  U.S. bankcard fees increased as a result of higher levels
of interchange fees, reflecting charge volume growth and pricing changes.
Private Bank fee revenue increased in the quarter and six months as a result of
higher trust, agency, and custodial fees on higher client business volumes under
management.

Global Corporate Banking and Other fee and commission revenue increased $26
million or 5% and $71 million or 7% from the comparable quarter and year-to-date
periods.  The improvement primarily reflected higher transaction banking
services revenue, investment management fees, and corporate finance fees in
Global Relationship Banking.  Fee and commission revenue in Emerging Markets was
essentially unchanged in the 1998 quarter and six months from the comparable
1997 periods.

-------------------------------------------------------------------------------
TRADING-RELATED REVENUE
-------------------------------------------------------------------------------

Trading-related revenue is composed of the "Foreign Exchange" and "Trading
Account" lines in the Statement of Income, and also includes other amounts
principally reflected in Net Interest Revenue.  The table below presents
trading-related revenue by business sector, by trading activity, and by income
statement line.


<TABLE>
<CAPTION>
 
                                                      Second Quarter      %        SIX MONTHS        %
                                                    ----------------         ------------------
(In Millions of Dollars)                              1998   1997 (A)  Change    1998   1997 (A)  Change
--------------------------------------------------------------------------------------------------------
<S>                                                   <C>    <C>       <C>      <C>     <C>       <C>
BY BUSINESS SECTOR
Global Corporate Banking
  Emerging Markets..................................  $ 259     $155       67   $  530   $  362       46
  Global Relationship Banking.......................    357      270       32      735      600       23
                                                    ----------------         ------------------
Total Global Corporate Banking......................    616      425       45    1,265      962       31
Global Consumer and Other...........................    114       86       33      193      138       40
                                                    ----------------         ------------------
TOTAL...............................................  $ 730     $511       43   $1,458   $1,100       33
--------------------------------------------------------------------------------------------------------
 
BY TRADING ACTIVITY
Foreign Exchange (B)................................  $ 391     $258       52   $  777   $  495       57
Derivative (C)......................................    218      129       69      454      336       35
Fixed Income (D)....................................     31       59      (47)      88      129      (32)
Other...............................................     90       65       38      139      140       (1)
                                                    ----------------         ------------------
TOTAL...............................................  $ 730     $511       43   $1,458   $1,100       33
--------------------------------------------------------------------------------------------------------
 
BY INCOME STATEMENT LINE
Foreign Exchange....................................  $ 465     $311       50   $  814   $  608       34
Trading Account.....................................     98       97        1      334      295       13
Other (E)...........................................    167      103       62      310      197       57
                                                    ----------------         ------------------
TOTAL...............................................  $ 730     $511       43   $1,458   $1,100       33
--------------------------------------------------------------------------------------------------------
</TABLE>

(A)  Reclassified to conform to the latest quarter's presentation.
(B)  Foreign exchange activity includes foreign exchange spot, forward, and
     option contracts.
(C)  Derivative activity primarily includes interest rate and currency swaps,
     options, financial futures, and equity and commodity contracts.
(D)  Fixed income activity principally includes debt instruments including
     government and corporate debt as well as mortgage assets.
(E)  Primarily net interest revenue.
--------------------------------------------------------------------------------

30
<PAGE>
 
                                                             CITICORP [LOGO] (R)

Trading-related revenue in the 1998 second quarter and six months increased $219
million and $358 million from the respective 1997 periods, primarily reflecting
higher foreign exchange and derivatives revenue driven by global currency
volatility, particularly in certain Asian currencies.

Levels of trading-related revenue may fluctuate in the future as a result of
market and asset-specific factors.

-------------------------------------------------------------------------------
SECURITIES TRANSACTIONS
-------------------------------------------------------------------------------

Net gains from the sale of securities were $300 million in the second quarter
and $541 million in the six months of 1998, compared with $124 million and $232
million in the comparable 1997 periods.  The net gains in the second quarter of
1998 reflected gross realized gains of $328 million ($591 million for the six
months) and gross realized losses of $28 million ($50 million for the six
months).  The 1998 second quarter and six months included realized gains of $174
million and $363 million, respectively, related to the sale of Brady bonds.  The
1997 second quarter included a realized gain of $58 million related to the sale
of Brady bonds.

The fair value of securities may fluctuate over time based on general market
conditions as well as events and trends affecting specific securities.


------------------------------------------------------------------------------
OTHER REVENUE
------------------------------------------------------------------------------
<TABLE> 
<CAPTION> 
                                                      Second Quarter      %        SIX MONTHS        %
                                                    ----------------           ------------------
(In Millions of Dollars)                              1998   1997 (A)  Change    1998   1997 (A)  Change
--------------------------------------------------------------------------------------------------------
 
<S>                                                   <C>    <C>       <C>      <C>     <C>       <C>
Credit Card Securitization Activity.................  $ 351     $118     NM     $  489     $283       73
Venture Capital.....................................    171      173     (1)       435      266       64
Affiliate Earnings..................................     42      112    (63)        71      171      (58)
Net Asset Gains.....................................    198       64     NM        229      156       47
Other Items.........................................     29        8     NM         66       36       83
                                                    ----------------           ------------------
TOTAL...............................................  $ 791     $475     67     $1,290     $912       41
--------------------------------------------------------------------------------------------------------
</TABLE>

(A)  Reclassified to conform to the latest quarter's presentation.
NM   Not meaningful, as percentage equals or exceeds 100%.
-------------------------------------------------------------------------------

The increase in revenue related to credit card securitization activity in the
1998 second quarter and six months reflected the acquisition of UCS, improved
net interest margins, and higher average securitized volumes.  The effect of
credit card securitization activity is discussed in more detail on page 35.

Venture capital revenue of $171 million in the 1998 second quarter remained
essentially unchanged from the year-ago quarter.  Revenue in the 1998 six months
reflected a $169 million improvement, benefiting from continued buoyant equity
markets.  Investments of venture capital subsidiaries are carried at fair value,
and revenue volatility can occur in the future based on general market
conditions, as well as events and trends affecting specific venture capital
investments.

Affiliate earnings in the 1998 second quarter and six months declined $70
million and $100 million from the year-ago periods, primarily due to a 1997
second quarter investment dividend together with reduced earnings in Credicard,
a 33%-owned Brazilian affiliate.

Net asset gains of $198 million and $229 million in the 1998 second quarter and
six months increased $134 million and $73 million from the year-ago periods,
reflecting a $132 million gain on the disposition of two real estate-related
equity interests obtained in connection with loan restructurings.  Net asset
gains in the 1997 second quarter included a $23 million gain related to the
disposition of an automated trading business, partially offset by an investment
writedown of $29 million in Latin America.  Revenue in the 1997 six months also
included gains of $46 million related to the 

                                                                              31
<PAGE>
 
                                                              CITICORP [LOGO](R)

refinancing agreement concluded with Peru, and $32 million from the sale of an
investment from the acquisition finance portfolio by Global Relationship
Banking, partially offset by an investment writedown of $20 million in Latin
America.

-------------------------------------------------------------------------------
PROVISION AND CREDIT LOSS RESERVES
-------------------------------------------------------------------------------

The provision for credit losses of $564 million and $1.1 billion in the 1998
second quarter and six months increased $52 million and $136 million from the
1997 periods.  The increase in the quarter reflected higher net write-offs in
both Global Corporate Banking and Global Consumer, while the increase in the six
months was attributable to Global Corporate Banking.

Details of net write-offs, additional provision, and the provision for credit
losses are included in the following table:

-------------------------------------------------------------------------------
NET WRITE-OFFS, ADDITIONAL PROVISION, AND PROVISION FOR CREDIT LOSSES
-------------------------------------------------------------------------------
<TABLE> 
<CAPTION> 
                                                       SECOND QUARTER      %        SIX MONTHS         %
                                                    -----------------         -------------------
(In Millions of Dollars)                                1998     1997   Change     1998     1997    Change
----------------------------------------------------------------------------------------------------------
 
NET WRITE-OFFS (RECOVERIES)
<S>                                                   <C>       <C>     <C>      <C>       <C>      <C>
Global Consumer (A).................................   $1,089   $ 925       18   $ 1,976   $1,818        9
Global Corporate Banking............................       29      (1)      NM        85      (62)      NM
                                                    -----------------         -------------------
TOTAL ADJUSTED NET WRITE-OFFS.......................    1,118     924       21     2,061    1,756       17
Effect of Credit Card Securitization Activity.......     (579)   (437)      32    (1,040)    (871)      19
                                                    -----------------         -------------------
TOTAL...............................................   $  539   $ 487       11   $ 1,021   $  885       15
----------------------------------------------------------------------------------------------------------
 
ADDITIONAL PROVISION
Global Consumer.....................................   $   25   $  25        -   $    50   $   50        -
                                                    -----------------         -------------------
TOTAL...............................................   $   25   $  25        -   $    50   $   50        -
----------------------------------------------------------------------------------------------------------
 
PROVISION FOR CREDIT LOSSES
Global Consumer.....................................   $  535   $ 513        4   $   986   $  997       (1)
Global Corporate Banking............................       29      (1)      NM        85      (62)      NM
                                                    -----------------         -------------------
TOTAL...............................................   $  564   $ 512       10   $ 1,071   $  935       15
----------------------------------------------------------------------------------------------------------
</TABLE>

(A)  Adjusted for the effect of credit card securitization activity.  See page
     35 for discussion.
NM   Not meaningful, as percentage equals or exceeds 100%.
------------------------------------------------------------------------------- 

Global Consumer net write-offs, adjusted for the effect of credit card
securitization activity, in the 1998 second quarter and six months were $1.1
billion and $2.0 billion, up from $925 million and $1.8 billion in the 1997
periods, primarily reflecting the acquisition of UCS and higher losses in Asia
Pacific and Latin America, partially offset by the effect of foreign currency
translation and improvements in the U.S. mortgage portfolio.  The Global
Consumer provision for credit losses included an additional provision, in excess
of net write-offs, of $25 million and $50 million in the 1998 and 1997 second
quarters and six month periods.  Net write-offs and the total provision may
increase from the 1998 second quarter as a result of economic conditions,
particularly in Asia Pacific and Latin America, the credit performance of the
portfolios, including bankruptcies, seasonal factors, and other changes in
portfolio levels.  See "Consumer Portfolio Review" on page 11 for additional
discussion of the consumer portfolio.

Global Corporate Banking net write-offs in the 1998 second quarter were $29
million, compared with net recoveries of $1 million in the 1997 second quarter.
The increase in net write-offs is primarily attributable to higher gross write-
offs in the Emerging Markets business, partially offset by higher recoveries in
Global Relationship Banking.  Global Corporate Banking net write-offs in the
1998 six months were $85 million, compared with net recoveries of $62 million in
the 1997 six months (including a 1997 first quarter $50 million recovery related
to the refinancing agreement concluded with 

32
<PAGE>
 
                                                              CITICORP [LOGO](R)
Peru). Excluding the 1997 first quarter refinancing recovery, the increase in
net write-offs is primarily attributable to higher gross write-offs in the
Emerging Markets business. There were no material credit losses related to
derivative and foreign exchange contracts or standby letters of credit and
guarantees in either six month period. Losses on commercial lending activities
can vary widely with respect to timing and amount, particularly within any
narrowly-defined business or loan type. Credit costs and cash-basis loans may
increase from the 1998 second quarter level due to conditions in Asia or other
factors.

All identified losses are immediately written off, and the credit loss reserves
described below are available to absorb all probable credit losses inherent in
the portfolio.  For analytical purposes only, Citicorp attributes its credit
loss reserves as detailed in the following table:

-------------------------------------------------------------------------------
CREDIT LOSS RESERVES
-------------------------------------------------------------------------------
<TABLE> 
<CAPTION> 
                                                                                        JUNE 30,   Dec. 31,   June 30,
<S>                                                                                     <C>        <C>        <C>
  (In Millions of Dollars)                                                                1998         1997     1997  
----------------------------------------------------------------------------------------------------------------------
 
AGGREGATE ALLOWANCE FOR CREDIT LOSSES
Global Consumer (A)...................................................................   $ 2,853     $2,487    $ 2,453
Global Corporate Banking..............................................................     3,429      3,429      3,429
                                                                                      --------------------------------
TOTAL AGGREGATE ALLOWANCE FOR CREDIT LOSSES (B).......................................     6,282      5,916      5,882
Reserves for Securitization Activities (C)............................................        61         85         91
TOTAL CREDIT LOSS RESERVES............................................................   $ 6,343     $6,001    $ 5,973
----------------------------------------------------------------------------------------------------------------------
 
ALLOWANCE AS A PERCENT OF TOTAL LOANS
Global Consumer.......................................................................      2.66%      2.30%      2.24%
Global Corporate Banking (D)..........................................................      3.92%      4.38%      4.80%
TOTAL.................................................................................      3.22%      3.16%      3.23%
----------------------------------------------------------------------------------------------------------------------
</TABLE>

(A)  The balance at June 30, 1998 includes $320 million of credit loss reserves
     related to the acquisition of UCS.
(B)  Includes $6.2 billion attributable to loans and loan commitments as a
     deduction from Loans, $50 million attributable to standby letters of credit
     and guarantees included in Other Liabilities, and $50 million attributable
     to derivative and foreign exchange contracts reported as a deduction from
     Trading Account Assets at June 30, 1998.
(C)  Attributable to mortgage loans sold with recourse.
(D)  Excludes allowance portion attributable to standby letters of credit and
     guarantees, and derivative and foreign exchange contracts.

--------------------------------------------------------------------------------

Credit loss reserves totaled $6.3 billion as of June 30, 1998, up from $6.0
billion as of December 31, 1997 and June 30, 1997, reflecting the addition of
$320 million of credit loss reserves related to the acquisition of UCS.

Uncertainty related to the economic and credit environment, particularly in Asia
Pacific and Latin America, as well as higher loan volumes, may result in further
increases in the aggregate allowance for credit losses.


-------------------------------------------------------------------------------
OPERATING EXPENSE
-------------------------------------------------------------------------------

Operating expense of $3.9 billion and $7.3 billion in the 1998 second quarter
and six months was up $710 million or 22% and $935 million or 15% from 1997.
The acquisition of UCS increased expense in the quarter and six months by $227
million.  In addition, approximately $200 million of the change in the second
quarter was due to increased spending on preparations for the Year 2000 and the
European Economic and Monetary Union ("EMU"), as well as for advertising and
marketing programs, electronic banking initiatives, and incentive compensation.
Global Corporate Banking adjusted expense increased $226 million and $389
million in the 1998 second quarter and six months, or 19% and 16% from year ago
periods, reflecting increases of 23% and 19% in Global Relationship Banking and
12% for both periods in Emerging Markets.  Expense in Global Consumer, including
UCS, increased $403 million and $478 million, or 21% and 12% for 

                                                                              33
<PAGE>
 
                                                             CITICORP [LOGO] (R)

the 1998 second quarter and six months, reflecting increases of 28% and 16%
in the developed markets and 3% and 4% in the emerging markets. Foreign currency
translation reduced expense by approximately 4% in both the quarter and six
months.

Employee expense of $1.8 billion in the 1998 quarter and $3.5 billion in the six
months was up $218 million or 14% and $267 million or 8% from the 1997 periods.
The increase primarily reflected salary increases, including incentive
compensation, and higher staff levels related to business expansion in the
emerging markets.  In addition, expense in the 1998 quarter and six months
included charges of $25 million and $50 million associated with performance-
based stock options granted in January 1998.  Staff levels of 99,000 at June 30,
1998 increased 7,500 (3,800 from UCS and 2,200 in the emerging markets) or 8%
from a year-ago.

Net premises and equipment expense was $528 million in the quarter and $1.0
billion in the six months, up $49 million or 10% and $58 million or 6% from
1997.  Other expense was $1.5 billion and $2.7 billion in the quarter and six
months, up $443 million or 41% and $610 or 29% from 1997.  Costs associated with
the Year 2000, EMU, the inclusion of UCS, and investment spending and higher
business volumes in the emerging markets all contributed to the increase.

As further described in the 1997 Annual Report and Form 10-K, Citicorp
recognizes that the arrival of the Year 2000 poses a unique worldwide challenge
to the ability of all systems to recognize the date change from December 31,
1999 to January 1, 2000.  Citicorp has assessed and is repairing its computer
applications and business processes to provide for their continued
functionality.  In addition, an assessment of the readiness of third parties
with which it interfaces is ongoing.

For Citicorp's computer applications, a process of inventory, scoping and
analysis, modification, testing and certification, and implementation is under
way, funded from a combination of a reprioritization of technology development
initiatives and incremental costs.  Citicorp does not anticipate that the
related overall costs will be material to any single year or quarter.  In total,
its costs for the remediation and testing of Citicorp's computer applications
will amount to approximately $650 million, an increase of $50 million from
previous estimates, over the three-year period from 1997 through 1999, of which
approximately $320 million has been incurred to date, including $90 million in
the 1998 second quarter.

Significant third parties with which Citicorp interfaces with regard to the Year
2000 problem include, among others, customers and business partners
(counterparties, supply chains, technology vendors and service providers, the
global financial market infrastructure (payment and clearing systems), and the
utility infrastructure (power, transportation, telecommunications) on which all
corporations rely. Unreadiness by these third parties would expose Citicorp to
the potential for loss, impairment of business processes and activities, and
disruption of financial markets. Citicorp is assessing these risks through
bilateral and multiparty efforts and participation in industry, country, and
global initiatives, and it is creating contingency plans intended to address
perceived risks. Citicorp cannot predict what effect the failure of such a third
party to address, in a timely manner, the Year 2000 problem would have on
Citicorp.

-------------------------------------------------------------------------------
RESTRUCTURING EXPENSE
-------------------------------------------------------------------------------

During the 1997 third quarter, Citicorp recorded an $889 million charge related
to cost-management programs and customer service initiatives to improve
operational efficiency and productivity.  These programs include global
operations and technology consolidation and standardization, the reconfiguration
of front-end distribution processes, and the outsourcing of various
technological functions.  The implementation of these restructuring programs,
which are expected to be substantially completed by the end of 1998, is designed
to ensure a positive effect on the quality of customer service.  Overall, these
programs are estimated to achieve pay-back towards the end of 1999.  Expense
savings generated by these programs are being reinvested in new products,
marketing programs, and additional cost and quality initiatives to further
increase revenue and reduce costs.

34
<PAGE>
 
                                                              CITICORP [LOGO](R)

The charge included $496 million for severance benefits associated with
approximately 9,000 positions.  It is estimated that about 1,500 new positions
will be added as part of this program, resulting in a net program reduction of
about 7,500 jobs.  The charge also included approximately $245 million related
to writedowns of equipment and premises and $148 million related to lease
termination and other exit costs.  Additional program costs that do not qualify
for recognition in the charge will be expensed as incurred in the implementation
of these programs, but are not expected to be material.

Of the $889 million restructuring charge, approximately $466 million remained in
the reserve as of June 30, 1998, with the difference reflecting the $245 million
of equipment and premises write-downs recorded in 1997, as well as $164 million
of primarily severance and related costs (of which $132 million has been paid in
cash and $32 million is legally obligated), together with translation effects.
Through June 30, 1998, 1,781 staff positions have been reduced under this
program, 609 in the 1998 second quarter.

Additional information about the 1997 restructuring charge, including the
businesses and regions affected, may be found in the 1997 Annual Report and Form
10-K.

------------------------------------------------------------------------------
INCOME TAXES
------------------------------------------------------------------------------

Income taxes were $658 million and $1.3 billion in the 1998 second quarter and
six months.  The effective tax rate was 37.5% in both periods, compared with 37%
and 37.5% in the 1997 periods.  The 1997 full-year effective tax rate was 37%.

-------------------------------------------------------------------------------
EFFECT OF CREDIT CARD SECURITIZATION ACTIVITY
-------------------------------------------------------------------------------

During the six months of 1998, $11.1 billion of U.S. credit card receivables
were securitized, which included $3.5 billion securitized from the UCS
portfolio.  As of June 30, 1998, the total amount of securitized receivables,
net of amortization, was $41.3 billion (including $11.0 billion related to UCS)
compared with $27.6 billion as of March 31, 1998 and $24.2 billion as of June
30, 1997.

The securitization of credit card receivables, which is described in the 1997
Annual Report and Form 10-K, does not affect the earnings reported in a period.
However, securitization affects the manner in which revenue and the provision
for credit losses are classified in the income statement.  For securitized
receivables, amounts that would otherwise be reported as net interest revenue,
as fee and commission revenue, and as net credit losses on loans are instead
reported as fee and commission revenue (for servicing fees) and as other revenue
(for the remaining cash flows to which Citicorp is entitled, net of credit
losses).  Because credit losses are a component of these cash flows, Citicorp's
revenues over the terms of these transactions may vary depending upon credit
performance of the securitized receivables.  However, Citicorp's exposure to
credit losses on the securitized receivables is contractually limited to these
cash flows.  The table on page 36 shows the net effect of credit card
securitization activity as an increase or (decrease) to the amounts reported in
the Consolidated Statement of Income and Average Balance Sheet, and under the
captions of Return on Assets, Net Interest Margin, and Consumer Net Credit Loss
Ratio.  The initial and ongoing effects of adopting Statement of Financial
Accounting Standards No. 125 in 1997 did not result in a change in the income
recognition policies for credit card securitization activity due to
immateriality.

                                                                              35
<PAGE>
 
                                                             CITICORP [LOGO] (R)

--------------------------------------------------------------------------------
EFFECT OF CREDIT CARD SECURITIZATION ACTIVITY
--------------------------------------------------------------------------------
<TABLE> 
<CAPTION> 
                                                                           SECOND QUARTER         SIX MONTHS
                                                                        ----------------------------------------
(In Millions of Dollars)                                                    1998     1997      1998       1997
----------------------------------------------------------------------------------------------------------------
 
<S>                                                                       <C>       <C>      <C>        <C>
Net Interest Revenue....................................................    ($908)   ($578)   ($1,548)   ($1,208)
Fee and Commission Revenue..............................................      (22)      23         19         54
Other Revenue...........................................................      351      118        489        283
Provision for Credit Losses.............................................     (579)    (437)    (1,040)      (871)
NET INCOME IMPACT OF SECURITIZATION.....................................  $    -    $    -   $      -   $      -
----------------------------------------------------------------------------------------------------------------
 
Average Assets (In Billions)............................................     ($37)    ($25)      ($32)      ($25)
Return on Assets........................................................      .14%     .11%       .12%       .11%
Net Interest Margin.....................................................    (.65)%   (.43)%     (.57)%     (.47)%
Consumer Net Credit Loss Ratio..........................................   (1.06)%   (.91)%    (1.04)%     (.93)%
----------------------------------------------------------------------------------------------------------------
</TABLE>


The effect of credit card securitization activity on net interest revenue, fee
and commission revenue, other revenue, and the provision for credit losses in
the 1998 second quarter and six months included ($174) million, ($9) million,
$96 million, and ($87) million, respectively, related to UCS.  Additionally, the
UCS acquisition increased the effect of credit card securitization activity on
the net interest margin by 8 basis points and 5 basis points in the 1998 second
quarter and six months, respectively.  The remaining impact of credit card
securitization is due to the increased level of securitization.

-------------------------------------------------------------------------------
FUTURE IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
-------------------------------------------------------------------------------

In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No.
133 "Accounting for Derivative Instruments and Hedging Activities," which
becomes effective on January 1, 2000 for calendar year companies such as
Citicorp.  This new standard will significantly change the accounting treatment
of end-user derivative and foreign exchange contracts by Citicorp and its
customers.  Depending on the underlying risk management strategy, these
accounting changes could affect reported earnings, assets, liabilities, and
stockholders' equity.  As a result, Citicorp and the customers to which it
provides derivatives and foreign exchange products may have to reconsider their
risk management strategies, since the new standard would not reflect the results
of many of those strategies in the same manner as current accounting practice.
Citicorp is in the process of evaluating the potential impact of the new
standard.

36
<PAGE>
 
                                                              CITICORP [LOGO](R)
-------------------------------------------------------------------------------
CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------------------------------------------
<TABLE> 
<CAPTION> 
CONSOLIDATED STATEMENT OF INCOME
                                                                               CITICORP AND SUBSIDIARIES
-----------------------------------------------------------------------------------------------------------
                                                                          SECOND QUARTER      SIX MONTHS
                                                             ----------------------------------------------
                                        
(In Millions of Dollars, Except Per Share Amounts)                         1998    1997    1998     1997
----------------------------------------------------------------------------------------------------------
<S>                                                                       <C>     <C>     <C>      <C>
INTEREST REVENUE
Loans, including Fees...................................................  $5,096  $4,717  $ 9,939  $ 9,271
Deposits with Banks.....................................................     267     245      549      469
Federal Funds Sold and Securities Purchased Under Resale Agreements.....     187     203      429      415
Securities
  U.S. Treasury and Federal Agencies....................................      85     107      147      177
  State and Municipal...................................................      35      35       68       67
  Other, including dividends (Principally in offices outside the U.S.)..     526     455    1,003      872
Trading Account Assets..................................................     325     272      580      515
Loans Held For Sale.....................................................     137     107      246      212
                                                                        ----------------------------------
                                                                           6,658   6,141   12,961   11,998
                                                                        ----------------------------------
 
INTEREST EXPENSE
Deposits................................................................   2,783   2,421    5,405    4,650
Trading Account Liabilities.............................................      85      76      177      149
Purchased Funds and Other Borrowings....................................     474     427      903      865
Long-Term Debt..........................................................     321     354      642      667
                                                                        ----------------------------------
                                                                           3,663   3,278    7,127    6,331
                                                                        ----------------------------------
 
NET INTEREST REVENUE....................................................   2,995   2,863    5,834    5,667
                                                                        ----------------------------------
 
PROVISION FOR CREDIT LOSSES.............................................     564     512    1,071      935
                                                                        ----------------------------------
 
NET INTEREST REVENUE AFTER PROVISION FOR CREDIT LOSSES..................   2,431   2,351    4,763    4,732
                                                                        ----------------------------------
 
FEES, COMMISSIONS, AND OTHER REVENUE
Fees and Commissions....................................................   1,553   1,441    2,994    2,793
Foreign Exchange........................................................     465     311      814      608
Trading Account.........................................................      98      97      334      295
Securities Transactions.................................................     300     124      541      232
Other Revenue...........................................................     791     475    1,290      912
                                                                        ----------------------------------
                                                                           3,207   2,448    5,973    4,840
                                                                        ----------------------------------
 
OPERATING EXPENSE
Salaries................................................................   1,471   1,286    2,826    2,550
Employee Benefits.......................................................     354     321      713      722
                                                                        ----------------------------------
  Total Employee Expense................................................   1,825   1,607    3,539    3,272
Net Premises and Equipment Expense......................................     528     479    1,027      969
Other Expense...........................................................   1,530   1,087    2,711    2,101
                                                                        ----------------------------------
                                                                           3,883   3,173    7,277    6,342
                                                                        ----------------------------------
 
INCOME BEFORE TAXES.....................................................   1,755   1,626    3,459    3,230
Income Taxes............................................................     658     602    1,297    1,211
                                                                        ----------------------------------
NET INCOME..............................................................  $1,097  $1,024  $ 2,162  $ 2,019
----------------------------------------------------------------------------------------------------------
 
INCOME APPLICABLE TO COMMON STOCK.......................................  $1,070  $  990  $ 2,103  $ 1,947
                                                                        ----------------------------------
 
EARNINGS PER SHARE
  BASIC.................................................................   $2.37   $2.16    $4.65    $4.23
  DILUTED...............................................................   $2.30   $2.10    $4.53    $4.11
----------------------------------------------------------------------------------------------------------
</TABLE>

                                                                              37
<PAGE>
 
                                                              CITICORP [LOGO](R)

<TABLE> 
<CAPTION> 
---------------------------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET                                                                  CITICORP AND SUBSIDIARIES
----------------------------------------------------------------------------------------------------------------------
                                                                                                                
                                                                                                    JUNE 30,     DEC. 31,
(In Millions of Dollars)                                                                             1997          1998
-------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                   <C>        <C>
 
ASSETS
Cash and Due from Banks.............................................................................  $  9,463   $  8,585
Deposits at Interest with Banks.....................................................................    14,013     13,049
Securities, at Fair Value
  Available for Sale................................................................................    34,160     30,762
  Venture Capital...................................................................................     3,117      2,599
Trading Account Assets..............................................................................    37,121     40,356
Loans Held for Sale.................................................................................     4,737      3,515
Federal Funds Sold and Securities Purchased Under Resale Agreements.................................    12,375     10,233
Loans, Net
  Consumer..........................................................................................   107,410    108,066
  Commercial........................................................................................    84,856     75,947
                                                                                                    ---------------------
Loans, Net of Unearned Income.......................................................................   192,266    184,013
  Allowance for Credit Losses.......................................................................    (6,182)    (5,816)
                                                                                                    ---------------------
Total Loans, Net....................................................................................   186,084    178,197
Customers' Acceptance Liability.....................................................................     1,643      1,726
Premises and Equipment, Net.........................................................................     4,675      4,474
Interest and Fees Receivable........................................................................     3,275      3,288
Other Assets........................................................................................    20,088     14,113
                                                                                                    ---------------------
TOTAL...............................................................................................  $330,751   $310,897
-------------------------------------------------------------------------------------------------------------------------
 
LIABILITIES
Non-Interest-Bearing Deposits in U.S. Offices.......................................................  $ 17,940   $ 16,901
Interest-Bearing Deposits in U.S. Offices...........................................................    40,920     40,361
Non-Interest-Bearing Deposits in Offices Outside the U.S............................................    10,394      9,627
Interest-Bearing Deposits in Offices Outside the U.S................................................   146,728    132,232
                                                                                                    ---------------------
  Total Deposits....................................................................................   215,982    199,121
Trading Account Liabilities.........................................................................    29,121     30,986
Purchased Funds and Other Borrowings................................................................    21,802     21,231
Acceptances Outstanding.............................................................................     1,774      1,826
Accrued Taxes and Other Expense.....................................................................     6,757      6,464
Other Liabilities...................................................................................    13,641     10,288
Long-Term Debt......................................................................................    19,957     19,785
 
STOCKHOLDERS' EQUITY
Preferred Stock (Without par value).................................................................     1,275      1,903
Common Stock ($1.00 par value)......................................................................       506        506
  Issued Shares: 506,298,235 in each period
Surplus.............................................................................................     6,512      6,501
Retained Earnings...................................................................................    18,371     16,789
Accumulated Other Changes in Equity from Nonowner Sources (A).......................................      (370)       (91)
Common Stock in Treasury, at Cost...................................................................    (4,577)    (4,412)
  Shares: 54,366,159 and 52,355,947, respectively
Total Stockholders' Equity..........................................................................    21,717     21,196
                                                                                                    ---------------------
TOTAL...............................................................................................  $330,751   $310,897
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

(A)  Amounts at June 30, 1998 and December 31, 1997 include the after-tax
     amounts for net unrealized gains on securities available for sale of $308
     million and $535 million, respectively, and foreign currency translation of
     ($678) million and ($626) million, respectively.  See note (A) on page 39
     for additional information.

--------------------------------------------------------------------------------

38
<PAGE>
 
                                                              CITICORP [LOGO](R)
<TABLE> 
<CAPTION> 
--------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY                         CITICORP AND SUBSIDIARIES
--------------------------------------------------------------------------------------------------------------
                                                                                                 SIX MONTHS
                                                                                      ------------------------
(In Millions of Dollars)                                                                       1998     1997
--------------------------------------------------------------------------------------------------------------
                                                                                 
                                                                                 
<S>                                                                                           <C>       <C>
Balance at Beginning of Period..............................................................  $21,196   $20,722
                                                                                 
Net Income..................................................................................    2,162     2,019
Change in Net Unrealized Gains on Securities Available for Sale.............................     (227)      276
Change in Foreign Currency Translation......................................................      (52)      (61)
                                                                                            -------------------
  Total Changes in Equity from Nonowner Sources (A).........................................    1,883     2,234
Redemption of Perpetual Preferred Stock                                          
  Second Series.............................................................................     (220)        -
  Third Series..............................................................................      (83)        -
  Series 14.................................................................................        -      (175)
  Series 16.................................................................................     (325)
Cash Dividends Declared                                                          
  Common....................................................................................     (522)     (484)
  Preferred.................................................................................      (58)      (72)
Repurchase of Common Shares (B).............................................................     (483)   (1,228)
Employee Benefit Plans and Other Activity (C)...............................................      329       412
Balance at End of Period....................................................................  $21,717   $21,409
---------------------------------------------------------------------------------------------------------------
</TABLE>

(A)  During the 1998 first quarter, Citicorp adopted Statement of Financial
     Accounting Standards No. 130, which addresses the manner in which total
     changes in equity from nonowner sources are presented in the financial
     statements, including unrealized gains and losses on securities available
     for sale and foreign currency translation.  The adoption had no effect on
     reported earnings, assets, or capital.
(B)  During the 1998 second quarter, no shares were repurchased as the stock
     repurchase program had been suspended in connection with the announced
     agreement to merge with Travelers Group.
(C)  Primarily issuance of common stock (including treasury shares) under
     employee benefit plans and related amortization and tax benefits.
-------------------------------------------------------------------------------

                                                                              39
<PAGE>
 
                                                              CITICORP [LOGO](R)

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS                                                       CITICORP AND SUBSIDIARIES
--------------------------------------------------------------------------------------------------------------------
                                                                                                     SIX MONTHS
                                                                                             -----------------------
(In Millions of Dollars)                                                                             1998     1997
--------------------------------------------------------------------------------------------------------------------
<S>                                                                                            <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES                                                       
NET INCOME...................................................................................  $   2,162   $   2,019
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES           
Provision for Credit Losses..................................................................      1,071         935
Depreciation and Amortization of Premises and Equipment......................................        384         377
Amortization of Goodwill and Acquisition Premium Costs.......................................         85          24
Provision for Deferred Taxes.................................................................       (175)        (19)
Venture Capital Activity.....................................................................       (518)        (29)
Net Gain on Sale of Securities...............................................................       (541)       (232)
Changes in Accruals and Other, Net...........................................................       (550)        842
Net Increase in Loans Held for Sale..........................................................     (1,222)     (2,499)
Net Decrease (Increase) in Trading Account Assets............................................      3,235      (1,690)
Net (Decrease) Increase in Trading Account Liabilities.......................................     (1,865)      1,457
                                                                                             -----------------------
TOTAL ADJUSTMENTS............................................................................        (96)       (834)
                                                                                             -----------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES....................................................      2,066       1,185
                                                                                             -----------------------
CASH FLOWS FROM INVESTING ACTIVITIES                                                       
Net Increase in Deposits at Interest with Banks..............................................       (964)     (1,154)
Securities  --  Available for Sale                                                         
  Purchases..................................................................................    (30,152)    (27,914)
  Proceeds from Sales........................................................................     10,702      10,646
  Maturities.................................................................................     16,025       9,209
Net Increase in Federal Funds Sold and Securities Purchased Under Resale Agreements..........     (2,142)     (2,518)
Net Increase in Loans........................................................................    (90,183)    (58,822)
Proceeds from Sales of Loans.................................................................     87,841      51,663
Business Acquisitions........................................................................     (3,655)          -
Capital Expenditures on Premises and Equipment...............................................       (658)       (596)
Proceeds from Sales of Premises and Equipment, Subsidiaries and Affiliates, and OREO.........        321         660
                                                                                             -----------------------
NET CASH USED IN INVESTING ACTIVITIES........................................................    (12,865)    (18,826)
                                                                                             -----------------------
                                                                                           
CASH FLOWS FROM FINANCING ACTIVITIES                                                       
Net Increase in Deposits.....................................................................     16,861      13,735
Net Increase in Federal Funds Purchased and Securities Sold Under Repurchase Agreements......        231       3,548
Commercial Paper and Funds Borrowed with Original Maturities of Less Than One Year         
  Proceeds from Issuance.....................................................................    312,539     386,497
  Repayment..................................................................................   (316,627)   (384,017)
Proceeds from Issuance of Long-Term Debt.....................................................      1,991       3,264
Repayment of Long-Term Debt..................................................................     (1,653)     (2,816)
Redemption of Preferred Stock................................................................       (628)       (175)
Proceeds from Issuance of Common Stock.......................................................        192         251
Treasury Stock Repurchases...................................................................       (483)     (1,228)
Dividends Paid...............................................................................       (584)       (556)
                                                                                             -----------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES....................................................     11,839      18,503
                                                                                             -----------------------
Effect of Exchange Rate Changes on Cash and Due from Banks...................................       (162)       (129)
                                                                                             -----------------------
NET INCREASE IN CASH AND DUE FROM BANKS......................................................        878         733
Cash and Due from Banks at Beginning of Period...............................................      8,585       6,905
                                                                                             -----------------------
CASH AND DUE FROM BANKS AT END OF PERIOD.....................................................  $   9,463   $   7,638
--------------------------------------------------------------------------------------------------------------------
                                                                                           
SUPPLEMENTAL DISCLOSURE                                                                    
CASH PAID DURING THE PERIOD FOR:                                                           
Interest.....................................................................................  $   6,347   $   5,542
Income Taxes.................................................................................      1,051       1,123
NON-CASH INVESTING ACTIVITIES                                                              
Transfer from Loans to OREO..................................................................        121         185
--------------------------------------------------------------------------------------------------------------------
</TABLE>  

40
<PAGE>
 
                                                             CITICORP [LOGO] (R)


<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET                                                  CITIBANK, N.A. AND SUBSIDIARIES
------------------------------------------------------------------------------------------------------------
                                                                                                         
                                                                                               JUNE 30,  DEC. 31,
(In Millions of Dollars)                                                                       1997       1998
-----------------------------------------------------------------------------------------------------------------
                                                                           
ASSETS                                                                     
<S>                                                                                           <C>        <C>
Cash and Due from Banks.....................................................................  $  8,478   $  7,788
Deposits at Interest with Banks.............................................................    14,914     14,245
Securities, at Fair Value:                                                 
  Available for Sale........................................................................    30,156     26,749
  Venture Capital...........................................................................     2,632      2,202
Trading Account Assets......................................................................    34,699     36,106
Federal Funds Sold and Securities Purchased Under Resale Agreements.........................    10,783      9,776
Loans, Net of Unearned Income...............................................................   166,599    153,670
  Allowance for Credit Losses...............................................................    (4,597)    (4,264)
                                                                                            ---------------------
Loans, Net..................................................................................   162,002    149,406
Customers' Acceptance Liability.............................................................     1,644      1,726
Premises and Equipment, Net.................................................................     3,450      3,338
Interest and Fees Receivable................................................................     2,472      2,441
Other Assets................................................................................    14,113      8,723
                                                                           
                                                                           
TOTAL.......................................................................................  $285,343   $262,500
-----------------------------------------------------------------------------------------------------------------
                                                                           
LIABILITIES                                                                
Non-Interest-Bearing Deposits in U.S. Offices...............................................  $ 14,798   $ 13,538
Interest-Bearing Deposits in U.S. Offices...................................................    25,473     24,932
Non-Interest-Bearing Deposits in Offices Outside the U.S....................................    10,219      9,394
Interest-Bearing Deposits in Offices Outside the U.S........................................   145,271    130,705
                                                                                            ---------------------
  Total Deposits............................................................................   195,761    178,569
Trading Account Liabilities.................................................................    27,960     27,811
Purchased Funds and Other Borrowings........................................................    18,447     16,334
Acceptances Outstanding.....................................................................     1,774      1,826
Accrued Taxes and Other Expense.............................................................     4,567      4,003
Other Liabilities...........................................................................     9,032      6,862
Long-Term Debt and Subordinated Notes.......................................................     9,614      9,927
                                                                           
STOCKHOLDER'S EQUITY                                                       
Capital Stock ($20.00 par value)............................................................       751        751
  Outstanding Shares: 37,534,553 in each period                            
Surplus.....................................................................................     7,674      7,453
Retained Earnings...........................................................................    10,348      9,318
Accumulated Other Changes in Equity from Nonowner Sources (A)...............................      (585)      (354)
                                                                           
Total Stockholder's Equity..................................................................    18,188     17,168
                                                                           
                                                                           
TOTAL.......................................................................................  $285,343   $262,500
-----------------------------------------------------------------------------------------------------------------
</TABLE>

(A)  Amounts at June 30, 1998 and December 31, 1997 include the after-tax
     amounts for net unrealized gains on securities available for sale of $165
     million and $345 million, respectively, and foreign currency translation of
     ($750) million and ($699) million, respectively.  See note (A) on page 39
     for additional information.
--------------------------------------------------------------------------------

                                                                              41
<PAGE>
                                                              CITICORP [LOGO](R)
--------------------------------------------------------------------------------
OTHER FINANCIAL INFORMATION
--------------------------------------------------------------------------------
SECURITIES
--------------------------------------------------------------------------------
<TABLE> 
<CAPTION> 
                                                              JUNE 30, 1998                  December 31, 1997 (A)
                                                       ------------------------            ------------------------
                                                            GROSS       GROSS
                                               AMORTIZED  UNREALIZED  UNREALIZED    FAIR     Amortized      Fair
(In Millions of Dollars)                         COST       GAINS       LOSSES    VALUE (B)     Cost     Value (B)
------------------------------------------------------------------------------------------------------------------
 
SECURITIES  --  AVAILABLE FOR SALE (C)
<S>                                            <C>        <C>         <C>         <C>        <C>         <C>
U.S. Treasury and Federal Agency.............    $ 6,626      $   70        $  1   $ 6,695      $ 4,031    $ 4,087
State and Municipal..........................      2,921         206         151     2,976        2,616      2,707
Foreign Government...........................     17,861         499         309    18,051       18,106     18,670
U.S. Corporate...............................      1,919         199         122     1,996        1,809      1,865
Other Debt Securities........................      1,882          18          23     1,877        1,198      1,129
Equity Securities (D)........................      2,430         230          95     2,565        2,131      2,304
 
                                                 $33,639      $1,222        $701   $34,160      $29,891    $30,762
VENTURE CAPITAL (E)..........................          -           -           -   $ 3,117            -    $ 2,599
------------------------------------------------------------------------------------------------------------------
 
Securities Available for Sale Include:
  Mortgage-Backed Securities.................    $ 1,659      $   16        $  1   $ 1,674      $ 1,091    $ 1,101
  Government of Brazil Brady Bonds...........        701         301           -     1,002        1,436      2,048
  Government of Venezuela Brady Bonds........        507           -          80       427          535        480
------------------------------------------------------------------------------------------------------------------
</TABLE>

(A)  At December 31, 1997, gross unrealized gains and losses on securities
     available for sale totaled $1,492 million and $621 million, respectively.
(B)  The fair value of securities may fluctuate over time based on general
     market conditions as well as events and trends affecting specific
     securities.
(C)  Securities available for sale held by equity method affiliates are not
     included in the table.  Citicorp's share of gross unrealized gains and
     losses related to those securities at June 30, 1998 was $16 million and $2
     million, respectively, and is included in the net unrealized gains  -
     securities available for sale component of stockholders' equity, net of
     applicable taxes.  At December 31, 1997, Citicorp's share of gross
     unrealized gains and losses related to securities available for sale held
     by equity method affiliates was $19 million and $8 million, respectively.
(D)  Equity securities available for sale include certain nonmarketable equity
     securities which are carried at cost.  At June 30, 1998, the carrying
     amount of those securities was $1,234 million (reported in both the
     amortized cost and fair value columns) and the fair value was $1,248
     million.
(E)  For the six months ended June 30, 1998, net gains on investments held by
     venture capital subsidiaries totaled $435 million, of which $518 million
     and $148 million represented gross unrealized gains and losses,
     respectively.  For the six months ended June 30, 1997, net gains on
     investments held by venture capital subsidiaries totaled $266 million, of
     which $138 million and $46 million represented gross unrealized gains and
     losses, respectively.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
TRADING ACCOUNT ASSETS AND LIABILITIES
-------------------------------------------------------------------------------
<TABLE> 
<CAPTION> 
                                                                                                      JUN. 30,  Dec. 31,
(In Millions of Dollars)                                                                                1998      1997
------------------------------------------------------------------------------------------------------------------------
 
TRADING ACCOUNT ASSETS
<S>                                                                                                   <C>       <C>
Trading Account Securities..........................................................................   $15,237   $15,891
Derivative and Foreign Exchange Contracts (A) (B)...................................................    21,884    24,465
TOTAL...............................................................................................   $37,121   $40,356
------------------------------------------------------------------------------------------------------------------------
 
Trading Account Liabilities
Securities Sold, Not Yet Purchased..................................................................   $ 5,506   $ 5,769
Derivative and Foreign Exchange Contracts (A) (B)...................................................    23,615    25,217
                                                                                                    --------------------
TOTAL...............................................................................................   $29,121   $30,986
------------------------------------------------------------------------------------------------------------------------
</TABLE>

(A)  Net of master netting agreements.  In addition, the asset balances at June
     30, 1998 and December 31, 1997 are reduced by $50 million of credit loss
     reserves.  See page 33 for additional explanation.
(B)  Deferred revenue on derivative and foreign exchange contracts, which is
     reported in Other Liabilities and attributable to ongoing costs such as
     servicing and credit considerations, totaled $432 million and $391 million
     at June 30, 1998 and December 31, 1997, respectively.
--------------------------------------------------------------------------------

42
<PAGE>
 
                                                              CITICORP [LOGO](R)

-------------------------------------------------------------------------------
TRADING AND END-USER DERIVATIVE AND FOREIGN EXCHANGE CONTRACTS
-------------------------------------------------------------------------------

The table below presents the aggregate notional principal amounts of Citicorp's
outstanding derivative and foreign exchange contracts at June 30, 1998 and
December 31, 1997, along with the related balance sheet credit exposure.
Additional information concerning Citicorp's derivative and foreign exchange
products and activities, including a description of accounting policies, and
credit and market risk management process is provided in the 1997 Annual Report
and Form 10-K.

<TABLE>
<CAPTION>
                                                                               NOTIONAL          BALANCE SHEET
                                                                          PRINCIPAL AMOUNTS   CREDIT EXPOSURE (A)
-----------------------------------------------------------------------------------------------------------------
                                                                          JUN. 30,  Dec. 31,  JUN. 30,   Dec. 31,
(In Billions of Dollars)                                                    1998      1997      1998       1997
-----------------------------------------------------------------------------------------------------------------
 
<S>                                                                       <C>       <C>       <C>        <C>
Interest Rate Products..................................................  $1,456.2  $1,298.3    $ 11.9     $ 10.8
Foreign Exchange Products...............................................   1,949.2   1,724.3      28.9       35.8
Equity Products.........................................................      60.1      61.6       3.5        2.0
Commodity Products......................................................      17.6      14.7       0.7        0.8
Credit Derivative Products..............................................      15.0       6.9       0.2          -
                                                                                            ---------------------
                                                                                                  45.2       49.4
Effects of Master Netting Agreements (B)................................                         (21.3)     (24.1)
Effects of Securitization (C)...........................................                          (2.0)      (0.8)
                                                                                            ---------------------
                                                                                                $ 21.9     $ 24.5
-----------------------------------------------------------------------------------------------------------------
</TABLE>

(A)  Amounts do not reflect credit loss reserves attributable to derivative and
     foreign exchange contracts.
(B)  Master netting agreements mitigate credit risk by permitting the offset of
     amounts due from and to individual counterparties in the event of
     counterparty default.
(C)  Citibank has securitized and sold net receivables and the associated credit
     risk related to certain derivative and foreign exchange contracts via
     Citibank Capital Markets Assets Trust.
-------------------------------------------------------------------------------

The tables below and on page 44 provide data on the notional principal amounts
and maturities of end-user (non-trading) derivatives, along with additional data
on end-user interest rate swaps and net purchased option positions at the end of
the second quarter of 1998.


<TABLE>
<CAPTION>
END-USER INTEREST RATE AND FOREIGN EXCHANGE CONTRACTS
------------------------------------------------------------------------------------------------------------------------
Notional Principal Amounts (A)                                         Percentage of June 30, 1998 Amount Maturing
------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>       <C>       <C>      <C>       <C>       <C>       <C>       <C>
                                            JUN. 30,  Dec. 31,  Within     1 to      2 to      3 to      4 to     After
(In Billions of Dollars)                      1998      1997    1 Year   2 Years   3 Years   4 Years   5 Years   5 Years
------------------------------------------------------------------------------------------------------------------------
 
INTEREST RATE PRODUCTS
Futures Contracts.........................    $ 38.6    $ 29.3      62%       32%        6%        -%        -%        -%
Forward Contracts.........................       6.3       6.9      98         -         -         -         1         1
Swap Agreements...........................     103.1     106.0      37        17        11         8         8        19
Option Contracts..........................      13.6      20.1      59        22         1         4         -        14
 
FOREIGN EXCHANGE PRODUCTS
Futures and Forward Contracts.............      56.6      62.4      94         4         -         1         1         -
Cross-Currency Swaps......................       4.4       3.4       5        14        11        21        34        15
------------------------------------------------------------------------------------------------------------------------
</TABLE>

(A)  Includes third-party and intercompany contracts.
--------------------------------------------------------------------------------

                                                                              43
<PAGE>
 
                                                             CITICORP [LOGO] (R)

-------------------------------------------------------------------------------
END-USER INTEREST RATE SWAPS AND NET PURCHASED OPTIONS AS OF JUNE 30, 1998
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                      REMAINING CONTRACTS OUTSTANDING AT JUNE 30,  --  NOTIONAL PRINCIPAL AMOUNTS
                                                    -------------------------------------------------------------------------------
(In Billions of Dollars)                                  1998          1999          2000          2001          2002         2003
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>           <C>           <C>           <C>           <C>           <C>
                                                    
RECEIVE FIXED SWAPS.................................     $70.3         $52.7         $40.6         $30.3         $23.1        $16.0
Weighted-Average Fixed Rate.........................       6.5%          6.6%          6.5%          6.6%          6.6%         6.9%
PAY FIXED SWAPS.....................................      15.1           8.8           6.5           5.5           4.6          3.8
Weighted-Average Fixed Rate.........................       6.4%          6.5%          6.5%          6.6%          6.8%         7.0%
BASIS SWAPS.........................................      17.7           3.9           0.3           0.2           0.2          0.2
PURCHASED CAPS (INCLUDING COLLARS)..................       6.6           2.7             -             -             -            -
Weighted-Average Cap Rate Purchased.................       6.4%          6.7%            -             -             -            -
PURCHASED FLOORS....................................       1.5           0.1           0.1           0.1           0.1          0.1
Weighted-Average Floor Rate Purchased...............       5.5%          5.8%          5.8%          5.8%          5.8%         5.8%
WRITTEN FLOORS RELATED TO PURCHASED CAPS (COLLARS)..       1.6           0.3             -             -             -            -
Weighted-Average Floor Rate Written.................       5.6%          5.3%            -             -             -            -
WRITTEN CAPS RELATED TO OTHER PURCHASED CAPS (A)....       3.9           2.5           2.5           2.3           1.8          1.8
Weighted-Average Cap Rate Written...................       8.3%          9.8%          9.8%          9.8%         10.6%        10.6%
                                                    
                                                    
Three-Month Forward LIBOR Rates (B).................       5.7%          5.7%          5.8%          5.9%          5.9%         6.0%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(A)  Includes written options related to purchased options embedded in other
     financial instruments.
(B)  Represents the implied forward yield curve for three-month LIBOR as of June
     30, 1998, provided for reference.
--------------------------------------------------------------------------------

44
<PAGE>
 
                                                              CITICORP [LOGO](R)

-------------------------------------------------------------------------------
CASH-BASIS, RENEGOTIATED, AND PAST DUE LOANS (A)
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                        JUNE 30,  Dec. 31,  June 30,
(In Millions of Dollars)                                                                  1998      1997      1997
--------------------------------------------------------------------------------------------------------------------
<S>                                                                                     <C>       <C>       <C>
COMMERCIAL CASH-BASIS LOANS
Collateral Dependent (at Lower of Cost or Collateral Value) (B).......................    $  193    $  258    $  274
Other (C).............................................................................     1,100       806       643
                                                                                      ------------------------------ 
TOTAL.................................................................................    $1,293    $1,064    $  917
--------------------------------------------------------------------------------------------------------------------
 
COMMERCIAL CASH-BASIS LOANS
In U.S. Offices.......................................................................    $  216    $  296    $  302
In Offices Outside the U.S. (C).......................................................     1,077       768       615
                                                                                      ------------------------------ 
TOTAL.................................................................................    $1,293    $1,064    $  917
--------------------------------------------------------------------------------------------------------------------
 
COMMERCIAL RENEGOTIATED LOANS
In U.S. Offices.......................................................................  $    -      $   20    $  243
In Offices Outside the U.S............................................................        45        39        52
                                                                                      ------------------------------
TOTAL.................................................................................    $   45    $   59    $  295
--------------------------------------------------------------------------------------------------------------------
 
CONSUMER LOANS ON WHICH ACCRUAL OF INTEREST HAD BEEN SUSPENDED
In U.S. Offices.......................................................................    $  688    $  856    $  978
In Offices Outside the U.S............................................................     1,176       993     1,058
                                                                                      ------------------------------ 
TOTAL.................................................................................    $1,864    $1,849    $2,036
--------------------------------------------------------------------------------------------------------------------
 
ACCRUING LOANS 90 OR MORE DAYS DELINQUENT (D)
In U.S. Offices.......................................................................    $  538    $  606    $  555
In Offices Outside the U.S............................................................       470       467       427
                                                                                      ------------------------------ 
TOTAL.................................................................................    $1,008    $1,073    $  982
--------------------------------------------------------------------------------------------------------------------
</TABLE>

(A)  For a discussion of risks in the consumer loan portfolio and of commercial
     cash-basis loans, see pages 11 and 15, respectively.
(B)  A cash-basis loan is defined as collateral dependent when repayment is
     expected to be provided solely by the underlying collateral and there are
     no other available and reliable sources of repayment, in which case the
     loans are written down to the lower of cost or collateral value.
(C)  Includes foreign currency derivative contracts with a balance sheet credit
     exposure of $44 million and $59 million at June 30, 1998 and December 31,
     1997, respectively, for which the recognition of revaluation gains has been
     suspended.
(D)  Includes Consumer loans of $983 million, $1.0 billion, and $937 million at
     June 30, 1998, December 31, 1997, and June 30, 1997, of which $247 million,
     $240 million, and $215 million, respectively, are government-guaranteed
     student loans.
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
OTHER REAL ESTATE OWNED (OREO) AND ASSETS PENDING DISPOSITION (A)
--------------------------------------------------------------------------------------------------------------------
                                                                                        JUNE 30,  Dec. 31,  June 30,
(In Millions of Dollars)                                                                  1998      1997      1997
--------------------------------------------------------------------------------------------------------------------
 
<S>                                                                                     <C>       <C>       <C>
Consumer OREO.........................................................................     $ 182     $ 263     $ 362
Commercial OREO.......................................................................       348       461       482
                                                                                      ------------------------------ 
TOTAL.................................................................................     $ 530     $ 724     $ 844
--------------------------------------------------------------------------------------------------------------------
 
ASSETS PENDING DISPOSITION (B)........................................................     $ 104     $  96     $  72
--------------------------------------------------------------------------------------------------------------------
</TABLE>

(A)  Carried at lower of cost or collateral value.
(B)  Represents consumer residential mortgage loans that have a high probability
     of foreclosure.
-------------------------------------------------------------------------------

                                                                              45
<PAGE>
 
                                                              CITICORP [LOGO](R)
-------------------------------------------------------------------------------
DETAILS OF CREDIT LOSS EXPERIENCE
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                             2ND QTR.   1st Qtr.   4th Qtr.   3rd Qtr.   2nd Qtr.
(In Millions of Dollars)                                       1998       1998       1997       1997       1997
-----------------------------------------------------------------------------------------------------------------
 
<S>                                                          <C>        <C>        <C>        <C>        <C>
AGGREGATE ALLOWANCE FOR
  CREDIT LOSSES AT BEGINNING OF PERIOD.....................    $5,928     $5,916     $5,899     $5,882     $5,866
                                                           ------------------------------------------------------
 
Provision for Credit Losses................................       564        507        486        486        512
                                                           ------------------------------------------------------
 
GROSS CREDIT LOSSES
CONSUMER
In U.S. Offices............................................       379        322        345        367        381
In Offices Outside the U.S.................................       246        207        209        219        221
COMMERCIAL
In U.S. Offices............................................         3          9         11         11          9
In Offices Outside the U.S.................................        81         76         56         42         29
                                                           ------------------------------------------------------
                                                                  709        614        621        639        640
                                                           ------------------------------------------------------
CREDIT RECOVERIES
CONSUMER
In U.S. Offices............................................        54         50         62         75         55
In Offices Outside the U.S.................................        61         53         60         59         59
COMMERCIAL
In U.S. Offices............................................        51         11         27         20         31
In Offices Outside the U.S.................................         4         18         11         24          8
                                                           ------------------------------------------------------
                                                                  170        132        160        178        153
                                                           ------------------------------------------------------
 
NET CREDIT LOSSES
In U.S. Offices............................................       277        270        267        283        304
In Offices Outside the U.S.................................       262        212        194        178        183
                                                                  539        482        461        461        487
                                                           ------------------------------------------------------
 
OTHER, NET (A).............................................       329        (13)        (8)        (8)        (9)
                                                           ------------------------------------------------------
 
AGGREGATE ALLOWANCE FOR
  CREDIT LOSSES AT END OF PERIOD (B).......................     6,282      5,928      5,916      5,899      5,882
Reserves for Securitization Activities.....................        61         70         85         89         91
                                                           ------------------------------------------------------
 
TOTAL CREDIT LOSS RESERVES.................................    $6,343     $5,998     $6,001     $5,988     $5,973
-----------------------------------------------------------------------------------------------------------------
 
Net Consumer Credit Losses.................................    $  510     $  426     $  432     $  452     $  488
As a Percentage of Average Consumer Loans..................      1.86%      1.64%      1.60%      1.67%      1.82%
 
Net Commercial Credit Losses (Recoveries)..................        29         56         29          9         (1)
As a Percentage of Average Commercial Loans................      0.14%      0.29%      0.16%      0.05%        NM
-----------------------------------------------------------------------------------------------------------------
</TABLE>

(A)  The 1998 second quarter reflects the addition of $320 million of credit
     loss reserves related to the acquisition of UCS.  The remaining amounts
     primarily include the effects of foreign currency translation.
(B)  See footnote (B) on page 33 for a discussion of the apportionment and
     display of the aggregate allowance for credit losses.
NM   Not meaningful, as net recoveries result in a negative percentage.
-------------------------------------------------------------------------------

46
<PAGE>
 
                                                              CITICORP [LOGO](R)

--------------------------------------------------------------------------------
CALCULATION OF EARNINGS PER SHARE
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                           SECOND QUARTER        SIX MONTHS
                                                             ----------------------------------------------
(In Millions, except Per Share Amounts)                                     1998     1997     1998     1997
                                                                           
-----------------------------------------------------------------------------------------------------------
 
<S>                                                                       <C>      <C>      <C>      <C>
NET INCOME..............................................................  $1,097   $1,024   $2,162   $2,019
Dividends on Preferred Stock............................................     (27)     (34)     (59)     (72)
                                                                         ----------------------------------
INCOME APPLICABLE TO COMMON STOCK.......................................  $1,070   $  990   $2,103   $1,947
-----------------------------------------------------------------------------------------------------------
 
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING..............................   451.8    458.5    452.0    460.0
Dilutive Effect of Employee Stock Plans (A).............................    12.6     12.8     11.8     13.5
                                                                         ----------------------------------
ADJUSTED FOR DILUTIVE COMPUTATION.......................................   464.4    471.3    463.8    473.5
-----------------------------------------------------------------------------------------------------------
 
BASIC EARNINGS PER SHARE................................................  $ 2.37   $ 2.16   $ 4.65   $ 4.23
DILUTIVE EARNINGS PER SHARE.............................................    2.30     2.10     4.53     4.11
-----------------------------------------------------------------------------------------------------------
</TABLE>

(A)  Includes the dilutive effect of stock options and stock purchase agreements
     computed using the treasury stock method and shares issuable under deferred
     stock awards.
-------------------------------------------------------------------------------

                                                                              47
<PAGE>
 
                                                              CITICORP [LOGO](R)

<TABLE>
<CAPTION>
AVERAGE BALANCES AND INTEREST RATES (TAXABLE EQUIVALENT BASIS)  --  QUARTERLY (A) (B)
----------------------------------------------------------------------------------------------------------------------------------
                                                 
                                                     AVERAGE VOLUME           INTEREST REVENUE/EXPENSE           % AVERAGE RATE
                                             --------------------------------------------------------------------------------------
                                              2ND QTR.  1st Qtr.  2nd Qtr. 2ND QTR. 1st Qtr.  2nd Qtr. 2ND QTR.  1st Qtr.  2nd Qtr.
(In Millions of Dollars)                        1998      1998      1997     1998     1998      1997     1998      1998      1997
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>       <C>       <C>      <C>      <C>       <C>      <C>       <C>       <C>
LOANS (NET OF UNEARNED INCOME) (C)                                                                    
Consumer Loans                                                                                        
  In U.S. Offices............................ $ 59,896  $ 55,955  $ 55,556   $1,517   $1,413    $1,444    10.16     10.24     10.43
  In Offices Outside the U.S. (D)............   50,547    49,532    51,876    1,553    1,496     1,604    12.32     12.25     12.40
                                             ---------------------------------------------------------
Total Consumer Loans.........................  110,443   105,487   107,432    3,070    2,909     3,048    11.15     11.18     11.38
                                             ---------------------------------------------------------
Commercial Loans                                                                                      
  In U.S. Offices                                                                                     
     Commercial and Industrial...............   11,327    11,316    10,460      230      228       221     8.14      8.17      8.47
     Mortgage and Real Estate................    3,088     2,777     2,882       67       62        68     8.70      9.05      9.46
     Loans to Financial Institutions.........      279       358       616        9       11        13    12.94     12.46      8.46
     Lease Financing.........................    2,928     3,007     3,049       47       50        54     6.44      6.74      7.10
  In Offices Outside the U.S. (D)............   63,205    59,583    49,391    1,674    1,584     1,314    10.62     10.78     10.67
                                             ---------------------------------------------------------
Total Commercial Loans.......................   80,827    77,041    66,398    2,027    1,935     1,670    10.06     10.19     10.09
                                             ---------------------------------------------------------
Total Loans..................................  191,270   182,528   173,830    5,097    4,844     4,718    10.69     10.76     10.89
                                             ---------------------------------------------------------
FEDERAL FUNDS SOLD AND RESALE AGREEMENTS                                                              
In U.S. Offices..............................    6,673     8,655     7,534       59       93        99     3.55      4.36      5.27
In Offices Outside the U.S. (D)..............    5,869     6,214     5,025      128      149       104     8.75      9.72      8.30
                                             ---------------------------------------------------------
Total........................................   12,542    14,869    12,559      187      242       203     5.98      6.60      6.48
                                             ---------------------------------------------------------
SECURITIES, At Fair Value                                                                             
In U.S. Offices                                                                                       
  Taxable....................................   10,371     8,689    11,087      106       93       141     4.10      4.34      5.10
  Exempt from U.S. Income Tax................    2,828     2,646     2,676       42       44        43     5.96      6.74      6.45
In Offices Outside the U.S. (D)..............   23,164    22,400    20,538      510      451       424     8.83      8.17      8.28
                                             ---------------------------------------------------------
Total........................................   36,363    33,735    34,301      658      588       608     7.26      7.07      7.11
                                             ---------------------------------------------------------
TRADING ACCOUNT ASSETS (E)                                                                            
In U.S. Offices..............................    5,452     6,585     4,768       84      100        70     6.18      6.16      5.89
In Offices Outside the U.S. (D)..............   11,487     9,900    10,075      242      155       203     8.45      6.35      8.08
                                             ---------------------------------------------------------
Total........................................   16,939    16,485    14,843      326      255       273     7.72      6.27      7.38
                                             ---------------------------------------------------------
LOANS HELD FOR SALE, In U.S. Offices.........    4,525     3,615     3,414      137      109       107    12.14     12.23     12.57
DEPOSITS AT INTEREST WITH BANKS (D)..........   14,404    13,957    13,669      267      282       245     7.43      8.19      7.19
                                             ---------------------------------------------------------
Total Interest-Earning Assets................  276,043   265,189   252,616   $6,672   $6,320    $6,154     9.69      9.67      9.77
                                                                          ---------------------------------------------------------
Non-Interest-Earning Assets (E)..............   50,511    47,726    40,464                            
                                             ------------------------------
TOTAL ASSETS................................. $326,554  $312,915  $293,080                            
-----------------------------------------------------------------------------------------------------------------------------------
DEPOSITS                                                                                              
In U.S. Offices                                                                                       
  Savings Deposits........................... $ 31,094  $ 30,068  $ 26,820   $  229   $  224    $  197     2.95      3.02      2.95
  Other Time Deposits........................   10,698    11,191    12,677      121      129       147     4.54      4.67      4.65
In Offices Outside the U.S. (D)..............  146,711   136,661   128,899    2,433    2,269     2,077     6.65      6.73      6.46
                                             ---------------------------------------------------------
Total........................................  188,503   177,920   168,396    2,783    2,622     2,421     5.92      5.98      5.77
                                             ---------------------------------------------------------
TRADING ACCOUNT LIABILITIES (E)                                                                       
In U.S. Offices..............................    3,698     4,391     2,348       48       60        34     5.21      5.54      5.81
In Offices Outside the U.S. (D)..............    2,578     2,149     2,491       37       32        42     5.76      6.04      6.76
                                             ---------------------------------------------------------
Total........................................    6,276     6,540     4,839       85       92        76     5.43      5.71      6.30
                                             ---------------------------------------------------------
PURCHASED FUNDS AND OTHER BORROWINGS                                                                  
In U.S. Offices..............................   12,708    11,971    16,193      165      150       252     5.21      5.08      6.24
In Offices Outside the U.S. (D)..............    9,056     8,253     7,687      309      279       175    13.69     13.71      9.13
                                             ---------------------------------------------------------
Total........................................   21,764    20,224    23,880      474      429       427     8.74      8.60      7.17
                                             ---------------------------------------------------------
LONG-TERM DEBT                                                                                        
In U.S. Offices..............................   17,773    15,328    14,780      245      236       226     5.53      6.24      6.13
In Offices Outside the U.S. (D)..............    3,218     3,997     4,920       76       85       128     9.47      8.62     10.44
                                             ---------------------------------------------------------
Total........................................   20,991    19,325    19,700      321      321       354     6.13      6.74      7.21
                                             ---------------------------------------------------------
Total Interest-Bearing Liabilities...........  237,534   224,009   216,815   $3,663   $3,464    $3,278     6.19      6.27      6.06
                                                                          ---------------------------------------------------------
Demand Deposits in U.S. Offices..............   10,031    11,511    10,751                            
Other Non-Interest-Bearing Liabilities (E)...   57,485    56,384    44,678                            
Total Stockholders' Equity...................   21,504    21,011    20,836                            
                                             -----------------------------                            
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY... $326,554  $312,915  $293,080                            
-----------------------------------------------------------------------------------------------------------------------------------
 
NET INTEREST REVENUE AS A PERCENTAGE OF AVERAGE INTEREST-EARNING ASSETS
In U.S. Offices (F).........................  $107,392  $103,634  $102,512   $1,281   $1,235    $1,257     4.78      4.83      4.92
In Offices Outside the U.S. (F).............   168,651   161,555   150,104    1,728    1,621     1,619     4.11      4.07      4.33
                                             ---------------------------------------------------------
TOTAL.......................................  $276,043  $265,189  $252,616   $3,009   $2,856    $2,876     4.37      4.37      4.57
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(A)  The taxable equivalent adjustment is based on the U.S. federal statutory
     tax rate of 35%.
(B)  Interest rates and amounts include the effects of risk management
     activities associated with the respective asset and liability categories.
(C)  Includes cash-basis loans.
(D)  Average rates reflect prevailing local interest rates including
     inflationary effects and monetary correction in certain countries.
(E)  The fair value carrying amounts of derivative and foreign exchange
     contracts are reported in non-interest-earning assets and other non-
     interest-bearing liabilities.
(F)  Includes allocations for capital and funding costs based on the location of
     the asset.
--------------------------------------------------------------------------------

48
<PAGE>
 
                                                              CITICORP [LOGO](R)

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
AVERAGE BALANCES AND INTEREST RATES (TAXABLE EQUIVALENT BASIS)  --  SIX MONTHS (A) (B)
-------------------------------------------------------------------------------------------------------------------------------
                                                      
                                                              AVERAGE VOLUME      INTEREST REVENUE/EXPENSE    % AVERAGE RATE
                                                         ---------------------------------------------------------------------
                                                            6 MONTHS   6 Months     6 MONTHS     6 Months   6 MONTHS  6 Months
(In Millions of Dollars)                                      1998       1997         1998         1997       1998      1997
------------------------------------------------------------------------------------------------------------------------------
<S>                                                        <C>         <C>        <C>           <C>         <C>       <C>
LOANS (NET OF UNEARNED INCOME) (C)                    
Consumer Loans                                        
  In U.S. Offices........................................    $ 57,925   $ 55,393       $ 2,930     $ 2,851     10.20     10.38
  In Offices Outside the U.S. (D)........................      50,040     51,542         3,049       3,181     12.29     12.45
                                                         -------------------------------------------------
Total Consumer Loans.....................................     107,965    106,935         5,979       6,032     11.17     11.38
                                                         -------------------------------------------------
Commercial Loans                                      
  In U.S. Offices                                     
     Commercial and Industrial...........................      11,321      9,859           458         423      8.16      8.65
     Mortgage and Real Estate............................       2,933      2,927           129         127      8.87      8.75
     Loans to Financial Institutions.....................         319        613            20          27     12.64      8.88
     Lease Financing.....................................       2,967      3,006            97          98      6.59      6.57
  In Offices Outside the U.S. (D)........................      61,394     47,762         3,258       2,566     10.70     10.83
                                                         -------------------------------------------------
Total Commercial Loans...................................      78,934     64,167         3,962       3,241     10.12     10.19
                                                         -------------------------------------------------
Total Loans..............................................     186,899    171,102         9,941       9,273     10.73     10.93
                                                         -------------------------------------------------
FEDERAL FUNDS SOLD AND RESALE AGREEMENTS              
In U.S. Offices..........................................       7,664      7,681           152         199      4.00      5.22
In Offices Outside the U.S. (D)..........................       6,042      5,218           277         216      9.25      8.35
                                                         -------------------------------------------------
Total....................................................      13,706     12,899           429         415      6.31      6.49
                                                         -------------------------------------------------
SECURITIES, At Fair Value                             
In U.S. Offices                                       
  Taxable................................................       9,530      9,821           199         243      4.21      4.99
  Exempt from U.S. Income Tax............................       2,737      2,594            86          84      6.34      6.53
In Offices Outside the U.S. (D)..........................      22,782     19,602           961         813      8.51      8.36
                                                         -------------------------------------------------
Total....................................................      35,049     32,017         1,246       1,140      7.17      7.18
                                                         -------------------------------------------------
TRADING ACCOUNT ASSETS (E)                            
In U.S. Offices..........................................       6,019      4,852           184         140      6.16      5.82
In Offices Outside the U.S. (D)..........................      10,693      9,743           397         377      7.49      7.80
                                                         -------------------------------------------------
Total....................................................      16,712     14,595           581         517      7.01      7.14
                                                         -------------------------------------------------
LOANS HELD FOR SALE, In U.S. Offices.....................       4,070      3,269           246         212     12.19     13.08
DEPOSITS AT INTEREST WITH BANKS (D)......................      14,180     13,517           549         469      7.81      7.00
                                                         -------------------------------------------------
Total Interest-Earning Assets............................     270,616    247,399       $12,992     $12,026      9.68      9.80
                                                                                ----------------------------------------------
Non-Interest-Earning Assets (E)..........................      49,119     41,650
                                                         -----------------------
TOTAL ASSETS.............................................    $319,735   $289,049
------------------------------------------------------------------------------------------------------------------------------
DEPOSITS                                              
In U.S. Offices                                       
  Savings Deposits.......................................    $ 30,581   $ 26,811       $   453     $   388      2.99      2.92
  Other Time Deposits....................................      10,945     12,589           250         286      4.61      4.58
In Offices Outside the U.S. (D)..........................     141,686    125,618         4,702       3,976      6.69      6.38
                                                         -------------------------------------------------
Total....................................................     183,212    165,018         5,405       4,650      5.95      5.68
                                                         -------------------------------------------------
TRADING ACCOUNT LIABILITIES (E)                       
In U.S. Offices..........................................       4,044      2,189           108          61      5.39      5.62
In Offices Outside the U.S. (D)..........................       2,364      2,470            69          88      5.89      7.18
                                                         -------------------------------------------------
Total....................................................       6,408      4,659           177         149      5.57      6.45
                                                         -------------------------------------------------
PURCHASED FUNDS AND OTHER BORROWINGS                  
In U.S. Offices..........................................      12,340     15,153           315         462      5.15      6.15
In Offices Outside the U.S. (D)..........................       8,654      7,367           588         403     13.70     11.03
                                                         -------------------------------------------------
Total....................................................      20,994     22,520           903         865      8.67      7.75
                                                         -------------------------------------------------
LONG-TERM DEBT                                        
In U.S. Offices..........................................      16,550     14,809           481         441      5.86      6.01
In Offices Outside the U.S. (D)..........................       3,608      4,633           161         226      9.00      9.84
                                                      
                                                         -------------------------------------------------
Total....................................................      20,158     19,442           642         667      6.42      6.92
                                                         -------------------------------------------------

Total Interest-Bearing Liabilities.......................     230,772    211,639       $ 7,127     $ 6,331      6.23      6.03
                                                                                ----------------------------------------------
Demand Deposits in U.S. Offices..........................      10,771     10,776
Other Non-Interest-Bearing Liabilities (E)...............      56,934     45,843
Total Stockholders' Equity...............................      21,258     20,791
                                                         -------------------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY...............    $319,735   $289,049
------------------------------------------------------------------------------------------------------------------------------
 
NET INTEREST REVENUE AS A PERCENTAGE OF AVERAGE INTEREST-EARNING ASSETS
In U.S. Offices (F)......................................    $105,513   $100,280       $ 2,516     $ 2,489      4.81      5.01
In Offices Outside the U.S. (F)..........................     165,103    147,119         3,349       3,206      4.09      4.39
                                                         -------------------------------------------------
TOTAL....................................................    $270,616   $247,399       $ 5,865     $ 5,695      4.37      4.64
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

(A)  The taxable equivalent adjustment is based on the U.S. federal statutory
     tax rate of 35%.
(B)  Interest rates and amounts include the effects of risk management
     activities associated with the respective asset and liability categories.
(C)  Includes cash-basis loans.
(D)  Average rates reflect prevailing local interest rates including
     inflationary effects and monetary correction in certain countries.
(E)  The fair value carrying amounts of derivative and foreign exchange
     contracts are reported in non-interest-earning assets and other non-
     interest-bearing liabilities.
(F)  Includes allocations for capital and funding costs based on the location of
     the asset.
-------------------------------------------------------------------------------

                                                                              49
<PAGE>
 
                                                              CITICORP [LOGO](R)
                      SECURITIES AND EXCHANGE COMMISSION

                         WASHINGTON, D. C.       20549

                                   FORM 10-Q



                 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934



For the Quarterly Period Ended June 30, 1998    COMMISSION FILE NUMBER 1-5738



                                    CITICORP
             (Exact name of registrant as specified in its charter)



DELAWARE                                                             13-2614988
(State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization)                               Identification No.)


399 PARK AVENUE, NEW YORK, NEW YORK                                        10043
(Address of principal executive offices)                              (Zip Code)



Registrant's telephone number, including area code (212) 559-1000


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 
    -------------          ______________              



Citicorp Common Stock                                                451,932,076
($1.00 Par Value)                          (Shares Outstanding on June 30, 1998)

50
<PAGE>
 
                                                              CITICORP [LOGO](R)

--------------------------------------------------------------------------------
FORM 10-Q CROSS-REFERENCE INDEX
--------------------------------------------------------------------------------

This document serves both as an analytical review for analysts, stockholders,
and other interested persons, and as the quarterly report filed on Form 10-Q
with the Securities and Exchange Commission.

<TABLE> 
<CAPTION> 

PART I  FINANCIAL INFORMATION                                                         PAGE
                                                                                      ----
<S>          <C>                                                                <C>                  

     Item 1 -  Consolidated Financial Statements

               Consolidated Financial Statements, Schedules, and Statistics
 
               Statement of Income for Second Quarter and Six Months Ended
               JUNE 30, 1998 AND 1997................................................. 37
 
               Balance Sheet as of
               JUNE 30, 1998 AND DECEMBER 31, 1997.................................... 38
 
               Statement of Cash Flows for the Six Months Ended
               JUNE 30, 1998 AND 1997..................................................40
 
               Calculation of Earnings Per Share.......................................47
 
     Item 2 -  Management's Discussion and Analysis of Financial Condition and
               Results of Operations...................................................1-36


PART II   OTHER INFORMATION


     Item 4 -  Submission of Matters to a Vote of Security Holders.....................52


     Item 5 -  Other Information...................................................... 52


     Item 6 -  Exhibits and Reports on Form 8-K....................................... 53


     Signatures....................................................................... 54
</TABLE> 

In the opinion of the management of Citicorp, all adjustments, consisting of
normal recurring adjustments, necessary for a fair presentation of the results
of operations for the second quarter and six months ended JUNE 30, 1998 AND 1997
have been included.

                                                                              51
<PAGE>
 
                                                             CITICORP [LOGO] (R)

Item 4 -  Submission of Matters to a Vote of Security Holders
          ---------------------------------------------------


At the annual meeting of stockholders of Citicorp held on April 21, 1998 the
following matters were voted on by the stockholders:

a)  The election of directors of Citicorp to hold office until the 1999 annual
    meeting and until the election and qualification of their successors. Each
    nominee was elected to the Board of Directors of Citicorp by votes cast as
    follows:

<TABLE> 
<CAPTION> 
------------------------------------------------------------------------------
                                                            Broker
Name                                For        Withheld  Non-Votes Abstentions
------------------------------------------------------------------------------
                                                                             
<S>                      <C>                <C>               <C>           <C>      
Alain J. P. Belda           389,584,481        1,007,850         0           0
D. Wayne Calloway           389,525,731        1,066,600         0           0
Paul J. Collins             389,505,196        1,087,135         0           0
Kenneth T. Derr             389,603,342          988,989         0           0
John M. Deutch              389,564,136        1,028,195         0           0
Reuben Mark                 389,872,172          920,159         0           0
Richard D. Parsons          389,514,078        1,076,253         0           0
John S. Reed                389,520,938        1,071,393         0           0
William R. Rhodes           389,545,011        1,047,320         0           0
Rozanne L. Ridgway          389,301,489        1,290,642         0           0
H. Onno Ruding              389,457,061        1,135,270         0           0
Robert B. Shapiro           389,601,364          990,967         0           0
Frank A. Shrontz            389,542,228        1,050,103         0           0
Franklin A. Thomas          389,467,213        1,125,118         0           0
Edgar S. Woolard, Jr.       389,615,049          997,282         0           0
-----------------------------------------------------------------------------
</TABLE> 
b) The selection of KPMG Peat Marwick as independent auditors of Citicorp. The
   selection of KPMG Peat Marwick was ratified by votes of 390,173,655 for,
   1,156,414 against, 0 broker non-votes, and 705,123 abstentions.

a) A stockholder proposal relating to cumulative voting for directors. Such
   proposal was defeated by votes of 210,886,595 against, 78,097,717 for,
   66,789,218 broker non-votes, and 36,261,599 abstentions.

a) A stockholder proposal relating to the disclosure of certain political
   contributions. Such proposal was defeated by votes of 295,406,497 against,
   19,887,466 for, 76,731,278 broker non-votes, and 9,951 abstentions.


Item 5 -  Other Information
          ------------------
At a special meeting of stockholders of Citicorp held on July 22, 1998, the
following matter was voted on by the stockholders:

a)  The Agreement and Plan of Merger, dated as of April 5, 1998, between
    Travelers Group Inc. and Citicorp, and the transactions contemplated
    thereby, was approved by votes of 336,143,991 for, 2,204,209 against, 0
    broker non-votes, and 4,242,333 abstentions.

52
<PAGE>
 
                                                              CITICORP [LOGO](R)

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


a)  Exhibit 23.  Consent of KPMG Peat Marwick LLP.

    Exhibit 27.01.  Financial Data Schedule.

    Exhibit 99.01.  Citicorp and Travelers Group Inc. unaudited pro forma
    condensed combined financial statements as of June 30, 1998, and for
    the three and six months ended June 30, 1998 and 1997.

    Exhibit 99.02.  Travelers Group Inc. unaudited consolidated financial
    statements as of June 30, 1998 and for the three months and six months
    ended June 30, 1998 and 1997 (incorporated herein by reference to Item
    1 of the Travelers Group Inc. Quarterly Report on Form 10-Q for the
    quarter ended June 30, 1998).


b)  Reports on Form 8-K:


i)   Citicorp filed a Form 8-K Current Report dated April 5, 1998 (Item 5) which
     report included the Agreement and Plan of Merger by and between Travelers
     Group Inc. and Citicorp dated as of April 5, 1998.

ii)  Citicorp filed a Form 8-K Current Report dated April 8, 1998 (Item 5) which
     report included Citicorp and Travelers Group Inc. unaudited pro forma
     condensed combined financial statements as of December 31, 1997 and for the
     three years then ended.

iii) Citicorp filed a Form 8-K Current Report dated April 21, 1998 (Item 5)
     which report included a summary of the consolidated operations of Citicorp
     for the three month period ended March 31, 1998 and (Item 7) the
     calculation of the ratio of income to fixed charges (Exhibit 12(a) thereto)
     and the calculation of the ratio of income to fixed charges including
     preferred stock dividends (Exhibit 12(b) thereto).

iv)  Citicorp filed a Form 8-K Current Report dated June 18, 1998 (Item 5) which
     report included a Consent of Arthur Anderson LLP to the incorporation by
     reference of its report dated March 13, 1997 in various registration
     statements of Citicorp and/or certain of its affiliates.

v)   Citicorp filed a Form 8-K Current Report dated July 21, 1998 (Item 5) which
     report included a summary of the consolidated operations of Citicorp for
     the three and six month periods ended June 30, 1998 and (Item 7) the
     calculation of the ratio of income to fixed charges (Exhibit 12(a) thereto)
     and the calculation of the ratio of income to fixed charges including
     preferred stock dividends (Exhibit 12(b) thereto).

                                                                              53
<PAGE>
 
                                                              CITICORP [LOGO](R)
                                   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.



               CITICORP By:     
               Registrant

                          /S/ Roger W. Trupin
                          _________________________
                          Roger W. Trupin
                          Vice President and Controller


                       By:  /S/ George E. Seegers

                          _________________________
                          George E. Seegers
                          Assistant Secretary



Date: August 13, 1998

54