Financial services firm CIT Group Inc swung to a loss during the
first quarter due to losses in its home and consumer lending
divisions, the AFP reported.
The first-quarter results led CIT Group to cut its dividend 60
per cent to 10 cents per share.
CIT Group lost $257.2m, or $1.35 per share in the first quarter,
compared with earnings of $200.6m, or $1.01 per share, during the
same period the previous year.
Analysts polled by Thomson Financial, on average, forecast earnings
of 58 cents per share for the quarter.
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The company’s home lending division posted a loss of $153.3m
during the first quarter, while its consumer finance division lost
$95.2m. The divisions earned a combined $11.9m during the first
quarter a year ago.
With deterioration in the credit markets continuing, CIT Group
set aside $464.5m to cover bad loans during the quarter. During the
first quarter of 2007, CIT Group set aside just $71.1 million for
loan-loss reserves.
Among the first-quarter loss reserves, CIT Group set aside
$217.8 million for losses in its home lending division and $149.6
million for its consumer lending division.
In March, CIT Group had maximised credit line available to it and
planned to sell assets to strengthen its capital base.
As part of a capital-raising plan, CIT Group agreed to sell $4.6
billion of asset-based loan commitments and aircraft worth $770
million.
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By GlobalDataIt has also identified $2 billion in assets that it will either
sell or use as collateral for a secured financing line.
CIT Group also hired financial advisers to look at other capital
raising plans, including the possibility of issuing more equity.
The advisers will also review alternatives for the company’s
rail-leasing business.
