Citigroup suffers $7.6 billion loss

By David Ellis, staff writer


NEW YORK (CNNMoney.com) -- Citigroup reported a painful fourth-quarter loss of $7.6 billion Tuesday, even amid signs that the worst may be behind the troubled financial giant.

Last month's decision to refund $20 billion in outstanding bailout funds to American taxpayers was the primary reason behind the bank's loss.

The move, which helped alleviate some of the government scrutiny the bank has had to endure over the past year, including questions on how it compensates its top executives, resulted in Citigroup reporting a loss of 33 cents on per share basis.

That was in line with what Wall Street was expecting from Citigroup, although the company said it still would have reported a loss of $1.4 billion if it did not take a big charge to pay back the government.

Citigroup also said it spent $25 billion to compensate its employees in 2009, which broke down to roughly $90,000 per employee. A year ago, the bank paid $31.1 billion to its employees, but Citigroup had far more many workers in 2008. The bank sold several divisions in 2009.

Tuesday's results bring to a close a rather difficult year for the New York City-based bank that included talk of possible government nationalization and its stock price tumbling below $1 a share.

Even though many of Citigroup's peers returned to profitability last year, the bank lost $1.6 billion. Still, that was far less than the $27.7 billion it lost just a year earlier, one of the toughest period's in the company's nearly 200-year history.

Citigroup CEO Vikram Pandit, who has tried to lead the company back to profitability over the past two years, called 2009 a period of "enormous progress."

"As we enter 2010, we are strongly capitalized, significantly more efficient, and are executing on a clear strategy that is focused on clients," he said in a statement.

The bank also highlighted some encouraging signs within its massive loan portfolio. Credit losses fell to $7.1 billion during the quarter, down $800 million from the previous three-month period.

Citigroup also set aside less money for bad loans during the quarter, suggesting that related losses may soon start to moderate.

"Provisions and charge-offs were lower than we expected, suggesting that [Citigroup's] outlook for its loan book has improved," wrote Stuart Plesser, senior bank equity analyst with Standard & Poor's, in a note to clients after Citigroup's results were released.

But much of that improvement was outside the United States, particularly in countries like Korea and Mexico, just two of the countries where Citigroup operates worldwide.

Pandit noted however that the bank remains particularly concerned about loans tied to the American consumer, particularly with so many individuals out of work and the recovery in the housing market still tentative.

"U.S. credit in my view comes down mostly to the mortgage portfolio," said Pandit during a conference call. "That is what we are watching most carefully."

Much of those so-called troubled assets however remain within the company's Citi Holdings division, which was created a little more than a year ago as a dumping ground for assets it has been looking to get rid off. Losses within that division widened to $2.4 billion during the quarter.

But things were hardly rosy either within the company's Citicorp unit, which include the businesses the company has staked its future on. Sales at its consumer, investment banking and transaction services businesses declined from the third quarter.

Revenues at Citi's massive North American credit card business, for example, fell largely due to a new series of federal rules aimed at making banks' credit card practices more consumer friendly.

Despite the less-than-stellar results, Citigroup (C, Fortune 500) shares gained more than 3% in afternoon trading Tuesday, rebounding from losses earlier in the day after the results were first announced.

The company is the second major financial firm to report its fourth quarter results. So far, investors have been largely disappointed.

Although JPMorgan Chase (JPM, Fortune 500) posted a better-than-expected profit on Friday, the stock fell due to cautious comments about the economy from CEO Jamie Dimon. The stock was down again on Tuesday.

Bank of America (BAC, Fortune 500), Wells Fargo (WFC, Fortune 500), Morgan Stanley (MS, Fortune 500) and Goldman Sachs (GS, Fortune 500) are all due to release their results later this week.  To top of page

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