It doesn’t matter how anybody tries to spin the fourth-quarter results for Citigroup (NYSE:C), the $7.58 billion in losses was a disaster for the giant bank, with overall losses for all of 2009 coming in at close to $1.6 billion.
Of course when contrasting the performance of Citigroup in the fourth quarter with results from last year, where they fell of the cliff, losing $17.26 billion at that time. So while it looks like an improvement, in reality the fall in income at core businesses and growing losses in poor performing units isn’t a good sign going forward into 2010 for them.
The loss for the company equaled 33 cents a share for the most recent quarter, and even when excluding losses connected to repaying the government, they still loss 6 cents a share during that period of time. In the previous three quarters Citigroup had turned a profit.
Domestic mortgage and credit continues to be the challenge for the company, and there is little sign any of that will change in the near future. With that in mind the company has added another $700 million to its reserves to cover loan and credit losses in the last quarter, with reserves now standing at around $36 billion as of the end of 2009.
While nothing positive can really be taken from these disastrous numbers, there were a couple of improvements that at least may give the bank a little breathing room. One is what was already mentioned above, and that is that there is a solid reserve set aside for the ongoing consumer loan losses, and they’ll definitely need that for the next year or two.
Second and possibly more important for the long haul is the fact that Citigroup did improve in the consumer loan loss sector, possibly showing they’re strengthening in that area, although that could be a real stretch to assert and confirm. What matters is how they perform in that sector in 2010, not a little improvement in 2009.
CEO Vikram Pandit tried to emphasis the reserves the company has saying, “As we enter 2010, we are strongly capitalized, significantly more efficient, and are executing on a clear strategy that is focused on clients. With the commitment and dedication of our people, we have created a strong foundation for the future.”
Pandit is under increasing pressure to turn things around quicker, and that loss of patience could be a negative influence on him if he attempts to do some things that could provide some short-term results but could hurt the company over the long term. He has to walk that delicate balance between short-term growth and long term performance. With the condition Citigroup is in, it’s going to be a tough job to show much in the way of increased revenue and profits in 2010, with the exception of growing profits by continuing to cut costs.
For the year, Citigroup ended with a loss of 80 cents a share on revenue of $91.1 billion.
