CIT Group Inc reported January 17, a net
loss of $130.7m or 69 cents per share in the fourth quarter ended
December 31 2007, as it increased reserves for credit losses and
took charges relating to home loan receivables and its student
lending business.

The swing to losses in the quarter resulted in a full year net
loss of $111m or 58 cents per share, against a net profit of
$1.02bn or $5.00 per share a year ago.
 
“We were not pleased with our reported loss this quarter, which
primarily related to charges on our home lending and student
lending businesses – two sectors that have recently experienced
significant change,” chairman and chief executive officer, Jeffrey
M Peek said.

Faced with higher funding costs, CIT aims to cut expenditure by
$75m in 2008 through laying off as much as five per cent of its
work force, Peek told analysts in a conference call.

Three actions had a significant on fourth quarter
earnings. These included an increase in reserves for credit losses
of approximately $300m, a booking of about $40m in pre-tax
losses on home lending receivables, and a write-off of all goodwill
and intangibles related to CIT’s student lending business acquired
in 2005.

While net finance revenue fell 9 per cent from the third quarter
owing to higher funding costs, strong aerospace lease rental rates
boosted operating lease net revenue to 7.22 per cent of average
operating leases, up from 6.9% in the third quarter and 7.09 per
cent the year before.

CIT’s transportation, and trade finance segments performed
reasonably well in the quarter but its vendor finance division was
inflated with an extraordinary gain from the divestment in Dell
Financial Services (DFS).

At transport, it reported higher net revenue compared with the
fourth quarter of 2006 due to asset growth and higher gains on
asset disposals – particularly in rail – as well as a fully
utilised commercial aircraft portfolio. Net finance revenue as a
percentage of average earning assets after depreciation was up from
the prior year.

Net income from transport rose 43.5% to $271.1m from a year ago
but a write-off of $16m in expenses related to an aborted plan to
raise capital tied to certain aircraft lowered the return on
risk-adjusted capital to 14.2 per cent from 16.8 per cent in the
previous quarter.

Net revenue from factoring rose 3.1 per cent from a year ago to
$113.4m in the fourth quarter but net finance revenue as a
percentage of average earning assets was lower over the same period
due to higher funding costs. Return on risk adjusted capital
improved to 18.9 per cent from the third quarter and the same
quarter last year.

CIT’s sale of its stake in (DFS) to Dell, and of the leasing
portfolio of U.S. Systems brought gains on disposal of $268.1m in
the fourth quarter.

Excluding these gains however, total net revenue was down from
last year. Total new business volume grew by 22 per cent from the
same quarter last year driven by international operations, CIT
said.