DBRS Confirms CIT at “A” & R-1 (low); Revises Long-Term Trend to Positive

Dominion Bond Rating Service (“DBRS”) has today confirmed ratings of CIT Group Inc. (“CIT” or the “Company”) at “A” and R-1 (low), as indicated above, and revised the rating trend on the Company’s long-term debt to Positive from Stable. The trend on the short-term ratings remains Stable.

The Positive trend on the long-term ratings incorporates DBRS’s expectations that CIT will continue to generate strong earnings while enhancing its portfolio diversity, as evidenced by its expanding range of consumer lending. Further, DBRS believes that CIT’s expansion of its deposit franchise will enhance the Company’s funding profile, which will positively impact the Company’s ratings. Accordingly, over the next 12 to 18 months, should CIT continue to produce consistent profitability at appropriate risk-adjusted returns while maintaining leverage near current levels and increasing its deposit funding, DBRS may raise CIT’s ratings.

The ratings of CIT are based on the Company’s overall strong business franchise as one of the largest independent finance companies, its consistent and diverse earning profile, and its sound asset management/credit culture. Offsetting factors include the Company’s reliance on wholesale funding, the large-sized credit concentration, and sizeable exposure to the aerospace industry and other higher-risk industries, such as construction equipment, energy, and infrastructure.

DBRS believes that CIT’s considerable market position and its strong business franchise have afforded the Company a high level of earnings stability across various economic environments. Profitability reflects respectable growth even as CIT moved to a lower-risk mix of businesses. Net income for the first quarter of 2006 was $229.7 million. For the year ended December 31, 2005, pre-tax income increased to an impressive $1.4 billion from $1.2 billion, driven by an increase in fee income and sound results in the factoring and vendor finance businesses. Increasing its consumer business diversity, the Company’s 2005 acquisition of the student lending business added to profitability on an absolute level. The lower return, lower-risk characteristics of this business line are reflected in the muted profitability measures in the Company’s consumer segments. CIT continues to show prudent asset growth, although traditionally organic; the Company’s acquisition of the student lending business bolstered 2005’s growth, which continued into the first quarter of 2006. Moreover, the Company’s focus on expanding its sales force has been a significant driver in the Company’s increased volumes and profitability. The noteworthy expansion of the consumer products originations further round out CIT’s already well-diversified portfolio and income stream. Furthermore, DBRS believes that CIT’s international businesses, while adding complexity to its operations, increase current earnings diversification and open up more opportunities for future growth.

DBRS considers CIT’s reliance on wholesale funding as the Company’s chief weakness. This reliance means CIT is exposed to the risk of a significant increase in funding costs and constrained access to new funding that could impact its ability to fund new business and sustain its franchise in the case of a crisis in the financial markets or a loss of confidence in CIT’s financial position. To overcome this reliance, CIT has developed its access to diverse liquidity sources through numerous funding vehicles, laddered the maturities of its funding, and enhanced its overall liquidity management. In combination with its more diversified business mix, this prudent liquidity strategy adds a significant level of comfort that CIT is well prepared for adverse funding markets.

DBRS notes that to further enhance the diversity of CIT’s funding, the Company utilizes CIT Bank (the “Bank”). The Utah-based industrial bank is able to offer Federal Deposit Insurance Corporation-insured deposits and hold loans. Going forward, the Bank will provide an additional source of liquidity as it expects to add Federal Home Loan Bank advances to its funding menu. Deposits, at $688 million at March 31, 2006, are currently minimal given CIT’s funding base, but are growing rapidly. The Company anticipates that the Bank will provide about 10% of 2006 fundings. Longer-term, the Company’s target is having the Bank provide 10% of total fundings. Although Bank funding is not expected to exceed 4.5% of total funding at year-end 2006, overall DBRS views the addition of a more significant deposit base as a positive step in further diversifying CIT’s funding profile.

Note:
Debt issued under CIT Group Funding Company of Canada or Newcourt Credit Group Inc. is unconditionally guaranteed by CIT Group Inc.
All figures in U.S. dollars.