Credit Commentary

Citigroup Earnings Release

By Administrator on Tuesday, April 28 2009

Citigroup Inc. (NYSE: C) reported net income for the first quarter of 2009 of $1.6 billion and a loss per share of $0.18, based on 5,385 million shares outstanding which came as a positive surprise to the market beat analyst expectation of loss of $0.34 a share.

Vikram Pandit, CEO, Citigroup said “Our results this quarter reflect the strength of Citi’s franchise and we are pleased with our performance and we had our best overall quarter since the second quarter of 2007. We continued to extend significant amounts of credit to U.S. consumers and continued to focus on supporting the U.S. housing market. Also since October 2008, our U.S. Cards business has worked with over 820,000 consumers to help them manage their credit card debt through a variety of forbearance programs”

For Global cards segment, in North America region, revenues declined 17% as lower securitization revenues primarily reflected the impact of higher credit losses in the securitization trusts. Managed revenues increased 6%, driven by a 252 basis point increase in the managed net interest margin to 12.61%, partially offset by the absence of a prior year gain on Visa shares of $349 million. The improvement in the managed net interest margin was a result of higher interest and fee revenues from higher revolving balances and pricing actions, and lower cost of funds. Purchase sales declined 18% reflecting a continued decline in discretionary and non-discretionary consumer spending.

As seen in the chart, average managed loans in North America (N.A.) declined 4% due to lower purchase sales and balance transfer volumes, partially offset by a decline in payment rates. The sector has seen a significant increase of 70% in Net Credit losses in first quarter of 2009 compared to the previous quarter.