Citing fallout from the economic downturn and the early effects of new credit card legislation, Citigroup Inc. today reported that its global branded credit card business lost $51 million during the fourth quarter ended Dec. 31; the unit reported a $117 million loss during the same quarter a year earlier. Revenues dropped 8.1%, to $2.38 billion from $2.59 billion.
Purchase volume on Citi cards during the quarter rose in all regions except North America, which dominates its card operations. Total purchase volume was $67.6 billion, down 2.2% from $69.1 billion.
The net charge-off rate on average managed loans was 9.4%, up 238 basis points from 7.02% for the same quarter a year earlier but an improvement from 10.29% during the third quarter ended Sept. 30. Citi reported 53.1 million open credit cards at the end of December, down 8% from 57.7 million a year earlier. Average managed loans were $114.2 billion, up slightly from $113.5 billion.
In North America, purchase volume fell 9.1%, to $41.8 billion from $46 billion. The charge-off rate on managed loans in the region was 9.45%, up 277 basis points from 6.68% a year earlier. Citi reported 23.1 million open accounts in North America at the end of December, down 11.5% from 26.1 million a year earlier.
In Asia, purchase volume rose 16.9%, to $15.2 billion from $13 billion a year earlier. The charge-off rate was 5.22%, up 120 basis points from 4.02% a year earlier. Citi reported it had 15.1 million open accounts in the region at the end of December, down 5% from 15.9 million a year earlier.
In Latin America, purchase volume was up 14.1%, to $8.1 billion from $7.1 billion a year earlier. The charge-off rate was 15.61%, up 147 basis points compared with 14.14% a year earlier. Citi reported 12.2 million open accounts in the region at the end of the quarter, down 5.4% compared with 12.9 million a year earlier.
In the Europe, Middle East and Africa region, purchase volume was $2.5 billion, up 8.7% from $2.3 billion a year earlier. The charge-off rate was 7.14%, up 371 basis points compared with 3.43% a year earlier. Citi reported 2.7 million open accounts in the region at the end of December, down 3.6% from 2.8 million a year earlier.
In its North American private-label retail credit operation, Citi reported purchase volume of $26.9 billion for the quarter, down 8.8% from $29.5 billion a year earlier. Its charge-off rate rose 359 basis points, to 13.38% from 9.79%. Citi reported it had 99.8 million open private-label retail card accounts at the end of December, down 10.6% from 111.6 million a year earlier.
In a conference call today with analysts, Citi Chief Financial Officer John Gerspach said Citi continues to “remove high-risk customers and add higher quality accounts” to its North American credit card portfolios. Citi has also put some 1.5 million card accounts into “forbearance” status, enabling customers to repay their debts over a longer than usual period of time, which Gerspach said is helping to reduce card losses.
Gerspach also told analysts the Credit Card Accountability, Responsibility and Disclosure Act, passed last year, which goes into effect next month, began to put a damper on fourth-quarter results because of new interest-rate pricing restrictions. He added that he expects the new legislation this year will reduce U.S. card revenues by some $400 million to $600 million compared with 2009.
