Citigroup posts loss, cites loan failures

NEW YORK - Citigroup Inc. yesterday became the latest bank to take a cautious view of consumers' credit problems as it reported its fourth-quarter results.

The bank said it lost $7.77 billion in the three months ended Dec. 31, citing failed loans and the cost of repaying $20 billion in federal bailout money.

Even with the loss, Citigroup, the hardest hit of the big U.S. banks during the 2008-09 credit crisis and recession, plans to give big bonuses this month to its top employees.

The earnings report, which met analysts' expectations, reflected Citigroup's struggles and changing status in the banking industry.

The company was forced to set aside $8.18 billion to cover the loans its consumers can't repay, joining other big lenders that are still losing money on loans. But Citigroup, having been forced to shed its big investment banking and brokerage businesses during the banking crisis, lacked those buffers against losses that other major financial companies still have.

The company's focus, therefore is on loans, which are deeply troubled but showing some early signs of improvement. For example, the addition to Citigroup's loan reserves to cover future losses was down 10 percent from the third quarter, and 36 percent from a year earlier.

Gregg Smith, a senior managing director at restructuring firm Conway MacKenzie, said Citigroup's results show the lending business was stabilizing. But he also noted it would be a long time before banks such as Citigroup were strong enough to lend at historical norms.

"They're just crawling out of the ditch now," Smith said of banks.

Many economists and investors are concerned that this trend could slow the economic recovery.

Citigroup's loss of $7.77 billion, or 33 cents per share, compared with a loss of $18.16 billion, or $3.40 a share, a year earlier.