Citigroup reveals $5.1 billion U.S. loss
NEW YORKâCitigroup Inc. says it will eliminate about 9,000 more jobs, after poor bets on defaulting loans and the tumultuous credit markets lopped $14 billion (U.S.) in value from the bank’s investments during the first quarter.
That writedown, plus more than $3 billion in costs related to consumers’ credit problems, led Citigroup to a quarterly loss of $5.1 billion. The loss was $1.02 per share, compared with a a profit of $1.01 a year earlier.
Citigroup said it has cut 13,200 jobs since the credit crisis began slamming the industry last summer. The bank announced 4,200 cuts in January, and more workforce reductions are likely.
"We’re very, very focused on efficiency," chief executive Vikram Pandit said in a conference call yesterday.
The most recent quarterly shortfall at the biggest bank in the United States by assets was not as massive as the nearly $10 billion loss suffered in the fourth quarter of last year, though. But analysts, on average, had expected the New York-based bank to lose only 95 cents per share, according to a Thomson Financial survey.
"We’re not happy with our financial results this quarter, although they’re not completely unexpected, given the assets we hold," Pandit said.
With significant exposure to problematic mortgages and leveraged loans, Citigroup remains at risk for further writedowns easy quick payday loans. As a result, Fitch Ratings downgraded the bank’s credit rating, while Moody’s Investors Services and Standard & Poor’s Ratings Services took actions that indicated Citigroup might be downgraded in future if its assets deteriorate firther.
Still, the $14 billion in writedowns compared with $18 billion marked down after the fourth quarter.
Meanwhile, revenue came to $13.2 billion. That was about half what the bank pulled in during the first quarter of 2007, but was more than the average analyst forecast, for $12.8 billion. The bank’s revenue was padded by its global consumer segment and global wealth-management business.
The bank ousted chief executive Chuck Prince late last year and promoted Pandit, a former Morgan Stanley investment banker, during a scramble for cash.
In December and January, Citi raised more than $30 billion through sales of assets and stock to outside investors, some of them funds run by Asian and the Middle Eastern governments. Citibank also has slashed costs and reorganized the bank’s mortgage business and wealth-management unit.
Citigroup, like other banks, still faces a deteriorating environment for consumer lending.
To prepare for more consumer-loan losses, the company added about $2 billion to its reserves.