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Citigroup Inc.'s global cards unit posted net income of $417 million for the first quarter, which ended March 31, after posting two consecutive quarters of net losses. Profit for the unit dropped 66% from $1.23 billion net income during the same period a year ago but was up substantially from net losses of $902 million in the third quarter of 2008 and $610 million in the fourth quarter of 2008. A $1.1 billion pre-tax gain from the sale of shares in Brazil-based Redecard SA helped boost first quarter global card revenues, net of interest expenses, to $5.77 billion, down 9.6% from $6.38 billion in the first quarter of 2008. Citi's operating expenses for the global card segment were $2.2 billion during the quarter, down 15.4% from $2.6 billion a year earlier. Net credit losses were $1.94 billion during the first quarter of 2009, up 55.2% from $1.25 billion a year earlier. Citi managed $185.6 million in average card loans worldwide during the first quarter, down 7% from $199.6 million a year earlier. The loans were on 170.5 million open card accounts, down 8.3% from 186 million accounts a year earlier. Purchase volume on those cards was $86.2 billion during the quarter, down 19.3% from $106.8 million a year earlier. In North America, Citi managed $145.9 million average card loans during the first quarter, down 4.5% from $152.7 million a year earlier. The loans were on 133.7 million open accounts, down 10% from 148.6 million accounts a year earlier. North American purchase volume during the first quarter was $63.4 billion, down 17.6% from $76.9 billion a year prior. In a conference call with analysts this morning, Ned Kelly, Citi's chief financial officer, noted that Citi's card charge-off rate has hovered above the U.S. unemployment rate since the first quarter last year. Unemployment in the U.S. was 8.5% during the first quarter this year, up from 5.1% a year prior, he said. "The combination of high unemployment and unprecedented declines in home values seems to be driving cards with net credit losses to new highs," Kelly said.
