Citing improved credit quality and higher overall purchase volume, Citigroup Inc. on Jan. 18 reported a $623 million profit for its Citi-branded credit card operation for the fourth quarter ended Dec. 31; the unit reported a $51 million loss during the same period a year earlier. Revenue rose 71%, to $4.07 billion from $2.38 billion.
Overall purchase volume for Citi-branded cards was $70.5 billion, up 4.3% from $67.6 billion, while the total number of cards in circulation declined 3.4%, to 51.3 million cards from 53.1 million.
The charge-off rate across all regions at the end of December was 7.84%, down 142 basis points from 9.26% a year earlier.
In North America, Citi-branded cards generated income of $203 million compared with a $101 million loss a year earlier, while revenue rose 243%, to $2.2 billion from $642 million. Sales volume was $40.4 billion, down 3.4% from $41.8 billion. Citi had 21.2 million open credit card accounts at the end of December, down 8.2% from 23.1 million a year earlier. The charge-off rate in North America was 8.8%, down 50 basis points form 9.3%.
The Latin America region generated income of $216 million compared with a loss of $56 million a year earlier, while revenue rose 7.6%, to $957 million from $889 million. Sales volume was $9.6 billion, up 18.5% from $8.1 billion. Citi had 12.5 million open accounts in Latin America at the end of the quarter, up 2.5% from 12.2 million a year earlier. The charge-off rate in Latin America was 10.01%, down 534 basis points from 15.35%.
In Asia, Citi-branded cards generated income of $175 million, up 59.1% from $110 million, while revenues rose 9%, to $741 million from $680 million. Citi had 15.1 million cards in circulation in Asia at the end of December, no change from a year earlier. The charge-off rate in Asia was 3.19%, down 200 basis points from 5.19%.
Citi’s Europe, Middle East and Africa unit generated income of $29 million, up 625% from a loss of $4 million. Revenues, however, fell 5.2%, to $164 million from $173 million. Sales volume was flat at $2.5 billion. Citi had 2.5 million open accounts in the region at the end of the year, down 7.4% from 2.7 million a year earlier. The charge-off rate on cards in the region was 4.11%, down 303 basis points from 7.14%.
Citi Holdings’ revenue from retail partner cards during the quarter was $1.78 billion, up 6% from $1.68 billion. Purchase volume was $21.9 billion, down 18.6% from $26.9 billion. Citi had 89.1 million open private-label retail card accounts at the end of December, down 10.7% from 99.8 million a year earlier. The charge-off rate on retail partner cards was 11.71%, down 110 basis points from 12.81%.
During a conference call with analysts, John Gerspach, Citi chief financial officer, said the quarter’s lower revenue for Citi-branded credit cards in North America reflected a charge for “enhancements’ on its ThankYou Rewards program and the “continued impact” of the CARD Act, which went into effect earlier in the year.
Overall card sales volume in North America may have declined during the quarter, but “sales per active account grew year over year” for the fourth consecutive quarter, Gerpsach noted. Fewer losses during the quarter “more than offset” the effects of lower purchase volume, he said.
Citi as a company reported fourth quarter net income of $1.3 billion compared with a net loss of $7.6 billion a year ago.
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