Citigroup loses $7.8B in fourth quarter

NEW YORK (AP) — Citigroup Inc. became the latest bank to take a cautious view of consumers' credit problems, reporting a $7.77 fourth-quarter loss due to failed loans and the costs of repaying government bailout money.

The bank said today it did see some early signs of improvement in its credit business although it still needed to set aside $8.18 billion to cover unpaid loans. That amount was down 10 percent from the third quarter, and 36 percent from a year earlier.

John Gerspach, Citigroup's chief financial officer, reported one of those improving signs during a conference call with the media, noting that the number of mortgage and credit card loans that were newly delinquent, or between one and three months past due, had started to stabilize and even drop in some of its lending portfolios.

"The U.S. credit story is still very much developing," however, Gerspach said.

Gerspach's comments were similar to those made by JPMorgan Chase & Co. when it reported Friday that it earned $3.28 billion during the fourth quarter thanks to its strong investment banking unit. JPMorgan said it set aside $7.28 billion for failed loans during the fourth quarter, nearly identical to the amount it reserved for bad loans during the final quarter in 2008. It also warned that it didn't know when it would be able to stop adding to its loan reserves.