Citigroup: Significant Decline In US Card Income
Citigroup has reported financial results for the fourth quarter of 2005 with Citi's US Card business reporting revenues declining 7 percent prior to applying an additional accounting charge (related to customer reward programs) that further reduced its reported revenues.
Although reporting a 9 percent increase in card purchase volume, revenues were reduced as a result of higher payment rates as consumers paid down credit card debt and continued net interest margin compression. Receivables outstanding at the end of the quarter fell 3 percent to $137 billion compared to the prior year.
Citi also said that reduced revenues also reflected the negative impact from an increase in consumer bankruptcy filings which resulted in approximately $120 million pre-tax of reduced interest and fee revenue. Net credit losses due to new bankruptcy legislation were approximately $600 million pre-tax in Citi's US Card business.
The combined effects of these factors resulted in Citi's reported net income from US Cards declining 60 percent over the same quarter in 2004.
Add your comment... (note that all comments are reviewed before they're published)