Citigroup Reports Quarter Loss of TARP-Related $7.6 Billion

Citigroup – the nation’s third-largest bank and credit card issuer – reported a fourth-quarter loss of $7.6 billion after taking charges from its repayment to the government’s bailout program – the results about even with expectations.

Excluding the $6.2 billion after-tax loss associated with the Troubled Asset Relief Program repayment, the net loss was $1.4 billion, or $.06 per share, Citi reported today.

Citi’s loan and credit losses continued to take their toll, but the bank emphasized that the rate of losses is diminishing.

Fourth quarter net credit losses of $7.1 billion were down $.8 billion from the previous quarter, marking the second consecutive quarter of improvement, Citi said. Managed net credit losses were $10 billion, down from $11 billion in the prior quarter, it reported.

Its fourth quarter reserve build for loan losses was $.7 billion. For the year, Citi added a net build of $8 billion to the allowance for loan losses. The allowance was $36 billion at year’s end, or 6.1 percent of total loans.

Citi also said it has worked with more than 715,000 homeowners to help them avoid potential foreclosure.  The bank also said it is currently helping more than 1.5 million credit card members to “manage their card debt through a variety of forbearance programs.”

“We have made enormous progress in 2009,” said Vikram Pandit, Chief Executive Officer of Citigroup. “It was our responsibility to get our own house in order. We greatly improved Citi’s capital strength, reduced the size and scope of the company, and refocused our business strategy to take advantage of our unmatched global network.

Last week, Chase – the nation’s top credit card issuer – posted a quarterly profit of $3.3 billion, fueled by investment banking fees, but it retained heavy losses on U.S. mortgage and credit card loans, which concerned investors.

Pandit outlined the following factors that “improved Citi’s capital strength”:

• Created Citi Holdings to “rationalize non-strategic businesses”
• Totally overhauled risk management
• Cut costs by over $13 billion annually
• Reduced headcount by 100,000, and reduced assets by $500 billion from peak levels
• Assembled a “talented new management team.”