CIT Group loss widens on charge, company plans more cost cuts
(Reuters) - Small-business lender CIT Group Inc (CIT.N) posted its third straight quarterly loss, mainly on debt refinancing charges, and said it plans to cut more costs over the next few quarters.
CIT, led by former Merrill Lynch Chief Executive John Thain, took a charge of $471 million related to the redemption of $4.6 billion of high-cost debt in the third quarter and its net loss widened to $305 million, or $1.52 per share.
Operating expenses are running well above the target of between 2 and 2.25 percent of average earning assets, Chief Financial Officer Scott Parker told analysts on a post-earnings conference call.
The company plans to reduce its quarterly operating run rate by $15 million to $20 million, he added. The cost cuts will include reductions in professional fees and employee costs.
CIT, which has a market value of about $8 billion, said in August that it had eliminated or refinanced $30 billion of high-cost debt since January 2010.
For the latest quarter, excluding one-time charges, CIT reported pre-tax income of $170 million, down from $176 million a year earlier.
Credit quality improved and the company did not report a provision for credit losses in the latest quarter. The provision was $47 million a year earlier
CIT's preliminary Tier 1 capital ratio stood at 16.7 percent at the end of the third quarter, down from 18 percent a year earlier.
CIT entered and emerged from bankruptcy in 2009. Thain was named CEO in February 2010 and was given the task of restructuring the company's operations as it struggled with losses on subprime mortgage assets.
The company has been operating under a special oversight agreement with the Federal Reserve Bank of New York since emerging from bankruptcy.
The New York-based company's shares, which have risen more than 11 percent since it last reported quarterly results in July, were trading down about 7 percent at $37.18 on the New York Stock Exchange on Tuesday morning.
(Reporting by Sharanya Hrishikesh in Bangalore; Editing by Sreejiraj Eluvangal)
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