NEW YORK (AP) — Citigroup Inc. became the latest bank to take a cautious view of consumers' credit problems, reporting a $7.77 billion fourth-quarter loss due to failed loans and the costs of repaying government bailout money.

The bank said yesterday it did see some early signs of improvement in its credit business although it still needed to set aside $8.18 billion to cover unpaid loans. That amount was down 10 percent from the third quarter, and 36 percent from a year earlier.

John Gerspach, Citigroup's chief financial officer, reported one of those improving signs during a conference call with the media, noting that the number of mortgage and credit card loans that were newly delinquent, or between one and three months past due, had started to stabilise and even drop in some of its lending portfolios. However, "the U.S. credit story is still very much developing", Gerspach said.

Gerspach's comments were similar to those made by JPMorgan Chase & Co. when it reported Friday that it earned $3.28 billion during the fourth quarter thanks to its strong investment banking unit. JPMorgan said it set aside $7.28 billion for failed loans during the fourth quarter, nearly identical to the amount it reserved for bad loans during the final quarter in 2008. It also warned that it didn't know when it would be able to stop adding to its loan reserves.

2009 was a year of drastic change at Citigroup, the big bank hit hardest by the credit crisis and recession. It may turn out to have the poorest fourth-quarter showing among the big banks, as it lacks the big investment bank and trading operations that have helped other companies like JPMorgan Chase offset their losses from bad loans.

The bank, which received $45 billion in government bailout money, repaid $20 billion during the fourth quarter and raised an equal amount of capital to fund the repayment. It shed 100,000 jobs during the year and completed 14 asset sales, including the Smith Barney brokerage and Japanese units Nikko Cordial Securities and Nikko Asset Management.

The bank's loss after accounting for payment of preferred dividends came to almost $7.77 billion, or 33 cents per share.