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March 18, 2010

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Revamped CIT loses US$1b

CIT Group said it lost US$1 billion in the fourth quarter, excluding a huge one-time reorganization benefit.

The US commercial lender also recorded a full-year loss of US$4 million on Tuesday as losses from bad loans offset gains from its bankruptcy reorganization.

The company emerged from bankruptcy protection on December 10. Results for the year include a US$10.3 billion pre-tax benefit from the reorganization.

In the fourth quarter, the company earned US$3.2 billion, including the reorganization benefit. Excluding special accounting procedures and other items related to its reorganization, its quarterly pre-tax loss was US$1 billion. That was due to low finance revenue and high borrowing costs, the company said.

Commercial net writeoffs, which reflects loans the company no longer expects will be repaid, totaled US$385 million in the fourth quarter.

Under its reorganization plan, the company canceled its common stock and issued new shares. Using previous shares outstanding, CIT Group lost a penny per share in 2009, and US$11.06 per share in 2008.


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