* Q4 EPS $1.03 vs est $0.61
* Interest expense halves
* Funded loan volume up 6 percent year-ago
* Shares rise 7 percent
By Jochelle Mendonca
Jan 29 CIT Group Inc's fourth-quarter
profit beat Wall Street estimates as the small business lender
halved spending on the servicing of long-term debt and said it
might return capital to shareholders this year, sending its
shares up 7 percent.
CIT Group, led by former Merrill Lynch Chief Executive John
Thain, has been operating under an agreement with the U.S.
Federal Reserve that has prevented it from buying back stock or
paying a dividend without approval.
Investors had been concerned that the agreement would
effectively preclude CIT from returning capital to shareholders.
But Thain said that this was not necessarily the case.
Speaking on a post-earnings conference call, he said the
company had asked for approval to return a "modest" amount of
capital and that the Federal Reserve could approve the request
without lifting the operating order.
Investors cheered Thain's comments, sending the stock to its
highest in 18 months. It was up $2.83 at $43.45 in late morning
trading on the New York Stock Exchange.
"The characterization of the 2013 capital return is less
important than the initiation of the return, which will attract
new income investors," BTIG analyst Mark Palmer said.
DEBT REDEMPTION PAYS OFF
The New York-based company also posted its first profit in
four quarters as its program to cut high-cost debt started to
CIT has wiped out more than $30 billion in expensive debt
since it emerged from bankruptcy three years ago, dramatically
lowering the amount it pays in interest.
The company's interest payments on its long-term debt halved
to $324.1 million in the fourth quarter.
For the quarter ended Dec. 31, CIT earned $206.8 million, or
$1.03 per share, far higher than the $36.3 million, or 18 cents
a share, it earned a year ago.
Analysts on average had expected the lender to earn 61 cents
a share, excluding items, according to Thomson Reuters I/B/E/S.
CIT also grew its loan book during the quarter. Funded loan
volume rose 6 percent to $3.1 billion, a faster pace than that
of most regional banks, despite increasing competition.