Citigroup Inc. lost $5.1 billion during the
first quarter and will eliminate about 9,000 more jobs, as poor
bets on mortgages and leveraged loans lopped billions of dollars
from its investment portfolio.
Write-downs related to mortgages and turmoil in the credit
markets reached about $12 billion, and costs stemming from
consumers' credit problems surpassed $3 billion, the bank said
Friday. And in a conference call with analysts, Citigroup chief
financial officer Gary Crittenden said the bank, seeking to cut
costs, is eliminating about 9,000 additional jobs.
That means Citigroup is cutting 13,200 jobs in all, following an
announcement in January that the bank was cutting 4,200 jobs.
The most recent quarterly shortfall at the nation's biggest bank
by assets was not as massive as the nearly $10 billion loss it
suffered in the fourth quarter of last year, though.
Citigroup shares rose 7 percent in pre-market trading and helped
pull the stock market higher, as many investors had been bracing
for even more dismal results. Citigroups's stock has fallen 18
percent since the beginning of the year.
But Citigroup essentially lost in the first three months of the
year, $1.02 per share, what it made in the same period in 2007 - $5
billion, or $1.01 per share. Analysts, on average, had expected the
New York bank to lose 95 cents per share, according to a Thomson
Financial survey.
With big exposure to mortgages and leveraged loans, Citigroup
remains at risk for further write-downs. The credit ratings agency
Moody's Investors Services on Friday changed its ratings outlook on
Citigroup to negative, citing write-downs that were on the high
side of its estimates.
In the first quarter, before taxes, Citigroup took $6 billion in
write-downs and credit costs on exposure to subprime mortgages;
$3.1 billion in write-downs on funded and unfunded highly leveraged
finance commitments; a downward credit value adjustment of $1.5
billion related to exposure to bond insurers; $1.5 billion in
write-downs on auction-rate securities; and $3.1 billion in credit
costs for consumers around the world.
Still, those write-downs were smaller than the $18.1 billion in
write-downs it marked after the fourth quarter.
And in another positive sign for investors, total revenue came
to $13.2 billion - about half what the bank pulled in during the
first quarter of 2007, but more than the average analyst forecast
for $12.8 billion. The bank's revenues were padded by its global
consumer segment and its global wealth management business.
The bank ousted CEO Chuck Prince late last year and promoted
Vikram Pandit, a former Morgan Stanley investment banker, as it
scrambles for cash.
In December and January, Citi raised over $30 billion through
sales of assets and stock to outside investors, some of which have
been funds run by Asian and the Middle Eastern governments. It also
has slashed costs and reorganized the bank's various businesses.
"We are taking the necessary steps to make Citi more efficient
while fostering a culture of accountability and teamwork," Pandit
said in a statement. "As we move into the second quarter and
beyond, we will continue to divest non-strategic assets and
allocate capital to the products and regions that will drive
increased revenues, enhance the value of our franchise, and
ultimately, maximize shareholder value."
The Financial Times reported Friday that Pandit vowed to cut
costs by 20 percent.
