Citigroup posts $2.5B loss, but beats expectations

[July 18, 2008]  NEW YORK (AP) -- Citigroup posted another loss and laid off more employees in the second quarter as it struggled with surging loan defaults, but the shortfall was smaller than Wall Street anticipated.

The nation's biggest banking company by assets reported Friday it lost $2.5 billion, or 54 cents per share, in the April-June period. In the same timeframe last year, the bank earned $6.23 billion, or $1.24 per share.

Despite the considerable loss, Citigroup shares rose 90 cents, or 5.5 percent, to $17.34 in pre-market trading. Analysts surveyed by Thomson Financial had predicted a larger loss of 66 cents share.

Citigroup Inc.'s securities and banking division wrote down the value of its assets by $7.2 billion, before taxes, and an asset revaluation cost its consumer lending business $745 million. Those write-downs totaling about $8 billion are significantly lower than write-downs taken in the first quarter and in last year's fourth quarter.

However, credit costs jumped to $7.2 billion as more consumers defaulted on their loans -- implying that while losses in the credit markets are decelerating, losses from actual defaults in Citigroup's mortgages, home-equity loans, auto loans and credit card lines are mounting.

Citigroup has failed to turn a profit for three straight quarters now. Its shares have tumbled 65 percent over the past year, and recently hit their lowest point since the day Citicorp and Travelers combined in October 1998.

And Merrill Lynch & Co. late Thursday reported a wider-than-expected quarterly loss and write-downs from losing investments in the debt markets approaching $40 billion.

But after better-than-expected results from two other big consumer banks this week -- JPMorgan Chase & Co. and Wells Fargo & Co. -- the market appears to be deciding that the prospect for the ailing financial sector may not be as dire as they feared.

Citigroup's revenue fell 29 percent to $18.7 billion, but came in higher than analysts forecasted.

The bank reduced its work force by 6,000 during the quarter, bringing its job cut total to 11,000 for 2008.

[Associated Press; By MADLEN READ]

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