Citi's Branded Credit Card Business Posts Q2 Loss

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Citi's branded credit card business lost $211 million from continuing operations during the second quarter, Citigroup announced Friday. The issuer earned $428 million from its branded card operations during the same period last year.

The net credit card charge-off rate was 10.18% of average managed loans during the quarter ended June 30, up 429 basis points from 5.89% a year ago. A basis point is one-hundredth of a percentage point.

Delinquency and charge-off rates are starting to show signs of stabilizing despite rising unemployment, John Gerspach, Citi's chief financial officer, told analysts during a conference call. "While still in early days, we are encouraged by these leading indicators," he said.

Citi had 55.8 million open card accounts at the end of June, down 9.4% from 61.6 million. Purchase volume on Citi cards was $63.6 billion, down 18.8% from $78.3 billion. Average managed loans were $110.8 billion, down 7% from $119.2 billion.

At the end of June, Citi had 105.7 million open accounts tied to its nonbranded credit cards issued with retail partners in North America under its new Citi Holdings division. That is down 9.2% from 116.5 million accounts a year earlier. The net charge-off rate on those cards was 14.16% of average managed loans during the period, up 637 basis points from 7.79% a year earlier.

Companywide, Citi reported net income of $4.28 billion, thanks in large part to a $6.7 billion gain from merging its ownership of investment firm Smith Barney into a joint venture with Morgan Stanley & Co. Inc. Citi reported a net loss of $2.5 billion companywide during the same period last year.