A rise in new business volumes and a return to
profitability has compensated for reduced earnings last year at
US-bank CIT Group.
Full year 2011 profit was $28m, down from
$526m in 2010 reflecting a sharp decline in net fresh start
accounting (FSA) accretion benefit and increased costs related to
debt redemptions, according to CIT’s annual results statement.
However, the group’s performance in the fourth
quarter of 2011, posting $34m in profit following a $29.2m loss in
the previous quarter, is a positive end to the year for the company
which emerged from bankruptcy at the end of 2009.
CIT statement on the results attributed the declines on 2010
income to reduced benefits from FSA. The statement pointed out
pre-tax income excluding net FSA accretion and the costs associated
with accelerated debt repayment was $140m and $302m for the 2011
fourth quarter and full year, respectively, and improved from
pre-tax losses of $160m and $575m for the respective periods in
CIT’s Vendor Finance arm reported pre-tax
earnings of $33m, down from $85m in the prior quarter and $60m
According to the company statement, the
quarter-on-quarter decline reflected gain on the sale of
underperforming loans in the third quarter and continued reduction
of FSA accretion while the year-on-year decline was driven
primarily by lower assets levels, lower FSA accretion and renewal
income offset by declining credit costs.
Financing and leasing assets rose by $100m to
$5bn due primarily to higher new business volumes and lower asset
sales. Funded new business volume was $717m, an 11% increase on the
third quarter and a 17% increase from the fourth quarter in
John Thain, chairman and chief executive of
CIT said: “We made significant progress this past year advancing
our goals and priorities.
“Our new business activity increased and we
lowered our cost of funds through the reduction of high cost debt
and the growth of CIT Bank and other funding sources.
“We will look to capitalize on this momentum
in 2012 as our market leading commercial franchises are well
positioned for growth. Our focus will remain on providing capital
to small businesses and middle market companies, while delivering
attractive and sustainable returns and increasing long-term value
for all our stakeholders.”