Press Release

Prospect Heights, IL - July 17, 2002 --- Household International (NYSE: HI) today reported second quarter earnings per share increased 16 percent to $1.08, from $.93 the prior year. These results mark Household's sixteenth consecutive record quarter. Second quarter net income increased 17 percent, to a record $514 million.

"Our results this quarter were fueled by ongoing strong demand for our loan products," said William F. Aldinger, Household's chairman and chief executive officer. "Growth this quarter was strong, while we have maintained our conservative underwriting criteria. Recognizing that the U.S. economy has yet to demonstrate a sustained rebound, we continued to maintain strong levels of reserves and capital. In addition, we continued our focus on liquidity management during the quarter, given the potential for volatility in the capital markets."

Aldinger concluded, "The company's operating performance has been very strong in the first half of 2002, and, although the economic environment is likely to remain uncertain, we believe our businesses are well-positioned for the remainder of the year."

Receivable Growth
At June 30, 2002, the company's managed basis portfolio, which includes loans that the company has securitized, totaled $105.5 billion, an increase of $13.9 billion, or 15 percent, from a year ago. The strongest growth came in the real estate secured portfolio, with an increase of $9.1 billion from a year ago. Growth was balanced between the company's branch-based consumer lending and mortgage services businesses.

Compared to the first quarter, managed basis receivables rose $4.3 billion, led by strong growth in the real estate secured product line.

The company's owned basis portfolio totaled $83.1 billion at June 30, 2002, an increase of $11.4 billion, or 16 percent, from a year ago and $3.5 billion, or 4 percent, compared to the end of the first quarter. Growth in the real estate secured portfolio drove the increase from both prior periods.

Revenues
Net revenues for the company's owned basis portfolio grew $393 million, or 17 percent, from the year-ago quarter.

Household's owned basis net interest margin for the second quarter increased $235 million, or 17 percent, to $1.6 billion. The increase was due to a larger receivable portfolio partially offset by a decrease in the company's owned basis net interest margin percent to 7.66 percent from 7.83 percent a year ago. The slight decrease was due to a relative increase in real estate secured receivables and a larger liquidity-related investment portfolio. Spreads on the investment portfolio are lower than those for the loan portfolio.

The second quarter managed basis net interest margin rose $395 million, or 21 percent, from a year ago, to $2.3 billion. The managed basis net interest margin percentage widened to 8.58 percent in the second quarter from 8.34 percent in the prior year. The net interest margin on a managed basis is greater than on an owned basis because the managed basis portfolio includes relatively more unsecured loans, which have higher yields. Lower funding costs benefited the net interest margin percentage on both an owned and managed basis.

Compared to the first quarter, the net interest margin on both an owned and managed basis declined primarily due to the above-mentioned increase in the company's portfolio of investments maintained for liquidity purposes.

Fee income, on both an owned and managed basis, was below the level of both the second quarter of 2001 and the first quarter of 2002. Improvements in early stage delinquencies resulted in lower late fees in the company's credit card businesses.

Securitization revenue, on an owned basis, increased $126 million, or 31 percent, from the prior year. The company continued to actively access the securitization market in the second quarter as part of liquidity management actions to limit reliance on short-term unsecured debt in potentially volatile markets. The company securitized nearly $2 billion of receivables in the quarter, compared to $1.4 billion in the year ago quarter. In addition, Household completed real estate secured financing transactions of $1.25 billion during the quarter.

Other income, on both an owned and managed basis, increased $46 million, or 93 percent, from the prior year. Higher collections in the company's tax refund lending business as well as increased revenues from the company's mortgage banking subsidiary caused the increase. Other income was $93 million lower than the first quarter, which included seasonal revenues from the company's tax refund lending business.

Operating Expenses
Operating expenses rose 10 percent from a year ago, driven by higher compensation, marketing and other costs to support the company's growing portfolio. Household's managed basis efficiency ratio was 32.2 percent in the second quarter, compared to 35.5 percent a year ago.

Credit Quality and Loss Reserves
The company monitors trends on a managed basis because the receivables that it securitizes are subjected to underwriting standards comparable to the owned basis portfolio, are serviced by operating personnel without regard to ownership and result in similar credit exposure for the company.

At June 30th, the managed basis delinquency ratio (60+days) was 4.53 percent, down 10 basis points from 4.63 percent at the end of March, led by improvement in the MasterCard/Visa portfolio. The managed basis delinquency ratio was 4.27 percent a year ago. The annualized managed basis net charge-off ratio for the second quarter of 4.26 percent was 17 basis points higher than the first quarter and 55 basis points higher than a year ago.

The owned basis delinquency ratio at June 30th was 4.61 percent, compared to 4.77 percent at March 31st and 4.48 percent a year ago. The annualized owned basis net charge-off ratio for the second quarter was 3.76 percent compared to 3.61 percent in the previous quarter and 3.26 percent a year ago.

Managed basis credit loss reserves totaled $4.4 billion at June 30th. Managed basis credit loss reserves as a percent of managed basis receivables equaled 4.14 percent, up from 4.10 percent at March 31st and 3.78 percent a year ago. Managed basis reserves-to-managed-nonperforming loans were 112 percent, up from 108 percent at the end of March and 110 percent a year ago. Managed basis credit loss reserves include a provision for estimated probable losses the company expects to incur under recourse provisions on securitized receivables.

Owned basis credit loss reserves totaled $3.0 billion at June 30th, an increase from $2.9 billion at March 31st. The ratio of owned basis reserves-to-owned receivables was 3.59 percent at June 30th, compared to 3.61 percent at March 31st and 3.31 percent a year earlier. Owned basis reserves-to-owned-nonperforming loans were 96 percent at June 30th, compared to 93 percent at the end of March and 91 percent a year ago. Owned basis reserve ratios are somewhat lower than comparable managed basis ratios because of the greater mix of real estate secured receivables in the owned portfolio which have lower credit losses.

Liquidity and Capital
During the quarter, Household continued to access the debt capital markets to fund its operations in routine fashion. The company also actively accessed the securitization markets, completing $1.25 billion in real estate secured financings and securitizing nearly $2 billion in other receivables. An additional $1 billion liquidity facility, backed by real estate secured loans, was established in the quarter. Additionally, the company increased its investment liquidity portfolio to $4.5 billion from $1 billion at the end of March which provides additional flexibility in the event of potential volatility in the financial markets.

The company maintained strong levels of capital. At June 30th, its ratio of tangible equity to tangible managed assets was 8.24 percent, compared to 8.41 percent at March 31st and 7.61 percent a year earlier.

In connection with its $2 billion share repurchase program, Household bought back 966,000 shares in the second quarter, totaling $60 million. At June 30th, Household had agreements with third parties to purchase, on a forward basis, approximately 6.1 million shares of common stock at a weighted average price of $55.63 per share.

Notice of Live Webcast
Household will broadcast a live teleconference call over the Internet on its website at www.household.com to discuss its second quarter results. The call will begin at 9:00 a.m. Central Daylight Time on July 17, 2002. A replay will also be available shortly after the end of the call.

About Household
Household's businesses are leading providers of consumer loan, credit cards, auto finance and credit insurance products in the United States, United Kingdom and Canada. In the United States, Household's largest business, founded in 1878, operates under the two oldest and most recognized names in consumer finance - HFC and Beneficial. Household is also one of the nation's largest issuers of private label and general purpose credit cards, including The GM Card® and the AFL-CIO's Union Plus® card. For more information, visit the company's web site at www.household.com.

This press release contains certain estimates and projections that may be forward-looking in nature, as defined by the Private Securities Litigation Reform Act of 1995. A variety of factors may cause actual results to differ materially from the results discussed in these forward-looking statements. Factors that might cause such a difference are discussed in Household International's Annual Report on Form 10-K, filed with the SEC.

Click here to view the Quarterly Financial Supplement in .PDF format.


(free Adobe® Acrobat Reader® provided here)

CONTACTS:
Craig A. Streem, Vice President - Corporate Relations and Communications: 847 564-6053, or
Celeste M. Murphy, Director - Investor Relations: 847 564-7568,
both of Household International.