Citigroup Projects Up to $600M Loss from Credit Card Laws

Citigroup projects a 2010 reduction in revenues of up to $600 million from the impact of credit card reform laws that went into full effect five days ago, it said in a regulatory filing.

Citigroup also said “net credit losses, delinquencies and defaults are expected to remain at elevated levels during the year,” in its annual report filed with the Securities and Exchange Commission late yesterday.

In a separate filing, Citigroup also disclosed that CEO Vikram Pandit’s total compensation for 2009 was $128,751, down from $38.2 million in 2008. Pandit voluntarily cut his salary to $1 in February 2009, receiving his base salary for January and February 2009.

The Credit CARD Act provides historic protections against retroactive rate increases and restricts certain fees, such as over-the-limit fees, and requires greater disclosures and advance notices from credit card issuers. Citi is the third-largest general-purpose credit card issuer in the nation.

“While management of North America Regional Consumer Banking believes that it can mitigate a portion of the impact of the CARD Act, Citi currently estimates that the net impact of the CARD Act on … revenues for 2010 could be a reduction of approximately $400 to $600 million,” Citi reported.

Citi also said that “credit trends will largely depend on the broader macroeconomic environment,” and the outcome of loss-mitigation efforts such as foreclosure rescue programs, primarily under the government’s Home Affordable Modification Program (HAMP).  

CitiMortgage, along with GMAC Mortgage, claimed the top spot as the most proficient servicer under HAMP through January. CitiMortgage has assisted 50 percent of eligible homeowners seriously delinquent on their mortgages – with a total of 122,176 mortgage modifications either in trial phases or in permanent status.

Citi reported that it expects U.S. consumer net credit losses to “increase modestly” in the first quarter of 2010 from fourth quarter 2009 levels, in part because of  ”expected seasonal patterns.”

After that, “there may be some slight improvement. However, net credit losses in the second half of 2010 will be dependent on the macroeconomic environment and success of the company’s ongoing loss mitigation efforts,” Citi reported.

Citigroup last month 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.