With the official implementation of the Credit CARD Act last week, it has caused companies like Citigroup (NYSE:C) to prepare their shareholders for expectant losses as the consequence of the Act, which Citigroup says will probably reach as high as $600 million in lost revenue in 2010.
Per its annual report required to be filed with the Securities and Exchange Commission (SEC), Citigroup officials added that their expectations are “net credit losses, delinquencies and defaults” will continue on at high levels for the duration of 2010.
This should also give a base to work from for those wanting to see how this will impact other major credit card companies in the U.S., as Citigroup is the third-largest issuer of credit cards in America, and the $600 million should be the place we look at to take into account how it will negatively impact revenue from other companies in 2010 from the top and those below them.
From now on consumers should know specifically what they face in taking on credit with the banks, and in that sense is should be better for all parties going forward.
Citigroup said in the filing they expect credit losses in the first quarter to be worse than the quarter before, but that isn’t from worsening conditions, but rather from normal, seasonal fluctuations.
For there, into the next quarter, they see things leveling off, but because of the increasing uncertainty as to whether we’re really in a recovery or not, and data showing things to be economically weaker than many media outlets have been reporting, the second half to 2010 is up in the air, and how deeply the effects of credit losses will depend on where things are overall economically at that time.
