Press Release

• Net Income for the Fourth Quarter Totaled $338 Million or $.66 Per Share
• Net Income for the Full Year Totaled $1.6 Billion, or $3.22 Per Share
• Tangible Equity to Tangible Managed Asset Ratio Increased to 9.08 Percent from 7.57 Percent at December 31, 2001

In 2002, the company incurred a $333 million, after tax, non-recurring charge relating to its nationwide settlement with state attorneys general and other regulators in the third quarter and the above mentioned $240 million after-tax loss on the disposition of its thrift in the fourth quarter. If not for these non-recurring charges, the company would have earned $578 million in the fourth quarter and $2.1 billion for the full year.

Receivable Growth
At December 31, 2002, the company's managed basis portfolio, which includes loans that the company has securitized, reached $107.5 billion, flat with the third quarter level and up 6.6 percent from a year ago. During the fourth quarter, the company sold $3.8 billion of real estate secured receivables and deliberately slowed growth as part of its efforts to achieve its capital targets. Excluding the loan sales, the portfolio grew 14.0 percent in the fourth quarter on an annualized basis. Growth was strongest in the credit card portfolios, which reflected seasonality. Compared to a year ago and excluding loan sales during 2002, there was a 12.7 percent increase in the managed portfolio.

The company's owned basis portfolio totaled $82.6 billion at December 31st, down 1.9 percent from September 30th due to the sale of $3.8 billion in real estate secured loans. The owned basis portfolio was 3.4 percent higher than a year ago reflecting net growth in real estate secured loans in excess of the loan sales, along with growth in the MasterCard/Visa and personal non-credit card portfolios.

Revenues
Net revenues in the fourth quarter for the company's owned basis portfolio declined by $315.4 million, or 11.0 percent compared with the third quarter, reflecting the pre-tax loss of $378.2 million on the disposition of the assets and deposits of the company's thrift. Excluding this non-recurring charge, net revenues on an owned basis totaled $2.9 billion, a 2.2 percent increase over the third quarter level. Household's owned basis net interest margin for the fourth quarter was $1.7 billion, flat with the third quarter due to the loan sales and a decline in the company's owned basis net interest margin to 7.42 percent from 7.46 percent for the third quarter.

Compared to a year ago, Household's owned basis net revenues declined by $86.4 million or 3.3 percent and, excluding the non-recurring charge, increased $292 million or 11.1 percent from the 2001 fourth quarter. Net interest income increased $110 million, or 6.8 percent from a year ago. The contraction in the owned basis net interest margin from 8.14 percent in the fourth quarter of 2001 to 7.42 percent in the fourth quarter of 2002 reflected the current year impact of the company's liquidity related investment portfolio. Spreads on the investment portfolio are lower than those for the loan portfolio.

Net revenues in the fourth quarter for the company's managed basis portfolio totaled $3.1 billion, a decline of 7.6 percent from the third quarter and up 3.9 percent from a year ago. Excluding the non-recurring charge, fourth quarter managed basis net revenues increased 3.6 percent from the third quarter and 16.6 percent from a year ago.

Household's managed basis net interest income for the fourth quarter was $2.4 billion, an increase of 1.1 percent from the third quarter and 10.8 percent from a year ago. The company's managed basis net interest margin equaled 8.28 percent, compared to 8.35 percent in the third quarter and 8.79 percent a year ago. Net interest margin on a managed basis is greater than on an owned basis because the managed basis portfolio includes more unsecured loans, which have higher yields.

Fee income, on both an owned and managed basis, increased compared to the third quarter and the year-ago quarter due to higher levels of credit card fees from both credit card businesses.

Securitization revenue on an owned basis totaled $536 million, a 5 percent increase from the fourth quarter of 2001. The company continued to actively access the asset-backed securities market as part of its liquidity management plans to limit dependence on the more volatile unsecured term debt market. Average receivables outstanding under securitization arrangements were $24.2 billion during the quarter, compared to $20.2 billion in the fourth quarter of 2001. The change in interest-only strip receivables, net of the related loss reserve and excluding the mark-to-market adjustment recorded in accumulated other comprehensive income, had the effect of increasing pre-tax income by $29.3 million for the fourth quarter of 2002, compared to $51.2 million for the third quarter of 2002, and $54.3 million for the fourth quarter of 2001.

Other income, on both an owned and managed basis, was higher than both prior-period quarters. The increase over both prior periods was attributable principally to two factors: higher revenues from the company's mortgage operations and a $55 million payment from a former U.K. credit card partner relating to the termination of the program.

Operating Expenses
Operating expenses for the fourth quarter totaled $1.1 billion, up 4.9 percent from the third quarter level, excluding the non-recurring charge of $525 million recorded in the third quarter in relation to the nationwide settlement with state attorneys general. Operating expenses increased 12.6 percent from a year ago. The increase in operating expenses was due to higher payroll and incentive costs, and increased legal and professional expenses related principally to the company's compliance initiatives. Households normalized efficiency ratio was 30.0 percent in the fourth quarter, compared to 31.4 percent a year ago.

Credit Quality and Loss Reserves
The company monitors credit quality trends on a managed basis because the loans 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.

The annualized managed basis net charge-off ratio for the fourth quarter was 4.39 percent, unchanged from the third quarter and up from 3.90 percent for the fourth quarter of 2001. Auto charge-offs rose sharply, reflecting an increase in loss severity on repossessed autos, due to weaker than normal seasonally depressed prices that affected the entire used-car industry. Real estate secured charge-offs rose 8 basis points from the third quarter to 1.11 percent and MasterCard/Visa charge-offs rose 17 basis points to 6.98 percent. Private label charge-offs declined 21 basis points in the quarter, to 5.91 percent, and personal non-credit charge-offs also declined in the quarter, improving 115 basis points to 7.84 percent. Managed basis charge-off ratios were higher for all products compared to a year earlier reflecting the continued weak U.S. economy and higher bankruptcies, as well as slower receivables growth rates. Higher year over year auto charge-offs were also due to higher loss severity.

At December 31st, the managed basis delinquency ratio (60+ days) was 5.24 percent, compared to 4.82 percent in the third quarter and 4.46 percent in the fourth quarter of 2001. The increase in the company's total delinquency ratio compared to the third quarter was due to the higher level of new bankruptcy filings and continued softness of the economy, including higher unemployment, together with no growth in receivables. A major contributor to the rise in real estate secured delinquency during the fourth quarter was the 5.6 percent decline in the portfolio due to loan sales and reduced originations. The decline in the portfolio contributed approximately one half of the 68 basis point increase in real estate delinquency. The increase in auto finance delinquency compared to the third quarter followed normal seasonal patterns. Both credit card portfolios saw quarterly declines in the delinquency ratio, while the ratio for personal non-credit card loans increased due to higher bankruptcies and unemployment and a decline in the size of the portfolio.

The annualized owned basis net charge-off ratio for the fourth quarter was 3.87 percent, down from 3.98 percent for the third quarter and up from 3.43 percent for the fourth quarter of 2001. The owned basis delinquency ratio at December 31st was 5.57 percent, compared to 5.01 percent at September 30th and 4.53 percent a year ago.

Managed basis credit loss reserves totaled $5.1 billion at year-end. Comparable amounts were $4.7 billion at September 30th and $3.8 billion at year-end 2001. The managed basis ratio of credit loss reserves to managed receivables equaled 4.74 percent, compared to 4.36 percent at September 30th and 3.78 percent a year earlier. Managed basis reserves-to-nonperforming loans were 112.6 percent, about flat with September 30, 2002 and up from 105.0 percent a year ago.

Owned basis credit loss reserves totaled $3.3 billion at December 31st, an increase of $205 million from September 30, 2002 and up $670 million from $2.7 billion a year earlier. The reserve additions for the fourth quarter and full-year reflect higher delinquency levels. The ratio of owned basis reserves-to-owned receivables totaled 4.04 compared to 3.72 percent at September 30th and 3.33 percent a year earlier. Owned basis reserve ratios are somewhat lower than comparable managed basis ratios because of the greater mix of real estate secured loans in the owned portfolio which have lower credit losses than unsecured products.

Liquidity and Capital
As noted above, during the fourth quarter the company sold $3.8 billion of real estate secured receivables and deliberately slowed growth as part of its efforts to achieve its capital targets. In addition, Household issued $400 million of common stock and $542 million of mandatory equity security units. The company continued to actively access the debt capital markets and asset-backed securities market to fund its operations. During the quarter the company completed $.8 billion in real estate secured financings and securitized $3.2 billion in other receivables.

By year-end, the company exceeded its previously announced capital targets. It strengthened its ratio of tangible equity to tangible managed assets to 9.08 percent, compared to a target level of 8.50 percent, and up from 7.95 percent at September 30, 2002 and 7.57 percent a year ago. The ratio of common tangible equity to tangible managed assets reached 6.83 percent at year end, versus the target level of 6.70 percent, and up from 6.16 percent at September 30, 2002, and 6.24 percent a year ago.

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.

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