August 4, 2008 / 1:54 PM / 12 years ago

Citi loses $176m on credit-card securitizations

Aug 4 (Reuters) - Citigroup Inc (C.N) posted a second-quarter loss from packaging credit card loans, hurt by higher funding and credit costs flowing through its securitization trusts, a regulatory filing showed.

The New York-based bank, one of the hardest hit in the year-long global credit crisis, made a quarterly net loss of $176 million from securitization of credit card receivables, compared with a profit of $243 million a year ago, it said in an Aug 1 regulatory filing.

Citigroup said provision for credit losses and for benefits and claims rose to $735 million, reflecting a rise of $567 million in net credit losses and $157 million in loan loss reserve builds.

In North America, credit costs rose to $345 million, driven by higher net credit losses and a higher loan loss reserve build. Net credit losses in North America were up 52 percent to $234 million, while loan loss reserve builds for the region doubled to $111 million.

Higher credit costs reflect higher business volumes, as well as a weakening in leading credit indicators and trends in the macroeconomic environment, including the housing market downturn, higher fuel costs, rising unemployment trends, and higher bankruptcy filings, Citigroup said. Last month, the largest U.S. bank by assets posted a smaller-than-expected quarterly loss of $2.5 billion, despite $11.7 billion of write-downs and credit losses tied to deteriorating capital markets and a slumping economy.

At the time, Citigroup Chief Financial Officer Gary Crittenden said North American credit card losses could exceed historical peaks, and consumer credit costs might have a “meaningful” impact on results for the rest of the year.

The bank’s shares closed at $18.87 Friday on the New York Stock Exchange.

(Reporting by Tenzin Pema in Bangalore; Editing by Quentin Webb)

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