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On March 2, 2009,
KKR Financial Holdings LLC
reported that it fell to a net loss in Q4 FY08, hurt by a higher provision for loan-losses, impairment charges, and losses on sale of assets amid the weak global economy. Net loss stood at $1.18 billion, or $7.85 per share, compared to a profit of $59.91 million, or $0.52 per share, in the prior year's quarter.
Total investment income for the fourth quarter plunged 22.4% to $227.87 million from $293.61 million in Q4 FY07 due to lower interest income across sources. Securities interest income dipped 8.4% to $36.76 million from $40.14 million, while loan interest income dropped 19.6% to $188.67 million from $234.76 million. In addition, other interest income dropped 88.2% to $2.08 million from $17.61 million in the year-ago quarter. Finally, dividend income decreased 67.1% to $363,000 from $1.10 million. Total interest expense fell 31.0% year-over-year to $121.11 million. Provision for loan losses stood at $417.49 million. Subsequently, net investment loss stood at $341.71 million against an income of $86.62 million a year earlier.
During Q4 FY08, KFN reported a net realized and unrealized loss on residential mortgage-backed securities and mortgage loans of $34.25 million; and loss of $745.50 million on investments. The company also recorded a net realized and unrealized loss on derivatives and foreign exchange of $72.85 million and a $6.21 million gain on extinguishment of debt. Consequently, KFN registered total other loss of $815.58 million. Total non-investment expenses fell 13.7% to $18.30 million due to lower management compensation expenses.
For FY08, total investment income increased 8.7% to $948.59 million from $872.37 million in the previous year. Net loss for the year widened to $1.08 billion, or $7.68 per share, from $100.21 million, or $1.11 per share, in FY07.