Citigroup Inc, battered by the global credit crisis, posted its fourth straight quarterly loss on Thursday, hurt by more than $13 billion of credit costs and write-downs tied to complex and low-quality debt. The bank said it was making good progress on shedding assets and cutting costs. But tight credit conditions and potential recessions globally could cut into its other businesses, from retail brokerage to credit card lending.
"There will be two types of banks: those that survive and grab market share, and those that struggle," said Matt McCormick, a portfolio manager at Bahl & Gaynor Investment Counsel in Cincinnati.
Citigroup posted a third-quarter net loss of $2.82 billion, or 60 cents per share, compared with a profit of $2.21 billion, or 44 cents, a year earlier. It loss from continuing operations was $3.42 billion, or 71 cents per share. Revenue fell 23 percent to $16.68 billion. Expenses totalled $14.43 billion, up 2 percent from a year earlier but down 8 percent from the second quarter.
Analysts on average expected a loss of 70 cents per share on revenue of $19.42 billion, according to Reuters Estimates. Citigroup ceded its crown as the largest US bank by assets to J.P. Morgan Chase & Co after shedding $50 billion of assets since June. Citigroup ended September with $2.05 trillion of assets, while J.P. Morgan had $2.25 trillion. Shares of Citigroup rose 37 cents to $16.60 in pre-market trading.
Chief Executive Vikram Pandit said that while the third-quarter results "reflect both a difficult environment as well as continued write-downs on our legacy assets, we are making excellent progress on the parts of our business we control, including expense reduction, head count, and balance sheet and capital management."
The bank said it has eliminated 11,000 jobs since June, when it employed 363,000 people, and 23,000 jobs this year. The quarterly results reflected an 86 percent increase in credit costs to $9.1 billion, mainly consisting of $4.92 billion of net credit losses and a $3.9 billion increase in loan loss reserves.
They also included $4.42 billion of net write-downs tied to mortgage debt, leveraged loans, monoline insurers, structured investment vehicles, commercial real estate and auction-rate securities. Citigroup announced results barely a week after losing out to Wells Fargo & Co in an effort to buy much of the troubled banking giant Wachovia Corp.
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