Citigroup Reports Higher Originations and More NPL Sales

Citigroup sold $600 million in nonperforming mortgages in the fourth quarter and $6 billion over the past two years, according to company executives.

Citigroup chief financial officer John Gerspach told investors and analysts during a conference call Thursday that those sales along with other actions have helped to reduce its distressed mortgage portfolio in Citi Holdings by 27% since the fourth quarter of 2010. Citi Holdings currently has $92 billion in distressed mortgage assets and $8.4 billion in reserves to cover possible loan losses.

Considering the improvement in the housing market, equity analysts repeatedly asked Citi executives when they will reduce the Citi Holdings reserve.

But Gerspach contended that the economic outlook is still uncertain due to the congressional impasse over fiscal and debt ceiling issues.

“If we get through that and see how the economy performs,” the CFO said, and the housing recovery is sustainable, “then we have a decision to make.”

He also noted that prices for nonperforming loans improved in the third quarter but were flat in the fourth quarter.

Citigroup originated $16.8 billion in single-family loans in the fourth quarter, up 16% from third quarter, but down 20% from a year ago.

The company did not break out mortgage banking revenue in its earnings release Thursday.

However, its retail banking revenue totaled $1.7 billion in the fourth quarter, up 20% from a year ago, “primarily reflecting higher mortgage banking revenue due to increased retail originations and wider margins.”