January 29, 2013 / 12:20 PM / in 5 years

CIT profit beats expectations as debt costs halve

(Reuters) - CIT Group Inc’s (CIT.N) fourth-quarter profit beat Wall Street estimates by a wide margin as the small-business lender halved the money it spent to cover interest payments on long-term debt.

The lender, led by former Merrill Lynch Chief Executive John Thain, has been redeeming its high-cost debt and taking charges as it cuts funding costs. It reported losses for first three quarters of 2012 on the charges.

The company has wiped out more than $30 billion in high-cost debt since it emerged from bankruptcy three years ago.

For the quarter ended December 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.

The company’s interest payments on its long-term debt halved to $324.1 million.

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.

    The lender, which has been operating under a special oversight agreement with the Federal Reserve Bank of New York since emerging from bankruptcy, is often pointed to as a takeover target.

    Analysts have cited Wells Fargo (WFC.N) as a potential buyer but CEO Thain has said the company is not for sale.

    Shares of the New York-based lender closed at $40.62 on Monday on the New York Stock Exchange.

    Reporting by Jochelle Mendonca in Bangalore; Editing by Saumyadeb Chakrabarty

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