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Citigroup Inc. this morning reported a net loss of $902 million in its global cards segment for the third quarter ended Sept. 30. The unit reported net income of $1.4 billion during the same period last year. The issuer attributes the loss this year mainly to "significantly higher" credit costs worldwide and lower revenue from card securitizations in North America. Net credit card charge-offs during the quarter reached $1.59 billion, up 51.4% from $1.05 billion during last year's third quarter. That represents a net charge-off rate of 7.02% of receivables, up 202 basis points from 5% last year. Citi increased its loan-loss reserves to $1.1 billion during the quarter, more than double the $503 million in loan-loss reserves a year ago. Citi logged 182.7 million open card accounts at the end of September, down nearly 1% from 184 million a year earlier. Citi reports 145.3 million open card accounts in North America, down nearly 2.5% from 149.1 million accounts in the region a year ago. In Asia, Latin America and Europe, the Middle East, and Africa, Citi increased the number of open card accounts by 7.2%, to 37.4 million from 34.9 million. Despite fewer card accounts worldwide, average receivables during the quarter were up 6.5%, to $198.7 million from $186.6 million last year. In North America, average managed receivables during the quarter were $150.6 million, up nearly 3.6% from $145.3 million last year. Outside North America, average receivables were $48.1 million, up nearly 16.5% from $41.3 million. Purchase volume totaled $111.1 billion, up less than 1% from $110.6 billion. In North America, spending volume was down 3.4%, to $80.3 billion from $83.1 billion. Elsewhere, volume was up 12%, to $30.8 billion from $27.5 billion. "Card-purchase sales in North America ... have declined, as we have seen higher spending on consumer necessities such as gas and food offset by a decline in discretionary spending," Gary Crittenden, Citi chief financial officer, told analysts during a conference call this morning. As cardholders are preparing for continued economic turbulence, so is Citi, which has "stress tested" its consumer-lending portfolios based on unemployment rates of 7% to 9% possible in 2009, Crittenden said. "Obviously, such unemployment levels could result in significantly higher credit costs well into 2009," he said.
