Citigroup posts $2.5 bn quarterly loss on new write-downs (Lead)July 18th, 2008 - 10:47 pm ICT by IANS
New York, July 18 (IANS) Citigroup announced here Friday a loss of $2.5 billion in the second quarter, its third consecutive quarterly loss but lower than the earlier figures. The loss was largely caused by $7.2 billion of write-downs of the global financial conglomerate’s investments in mortgages and other loans and by a weakness in the consumer market, which cost Citigroup $4.4 billion in credit losses and $2.5 billion to increase reserves.
The loss from April through June was less than expected by analysts, media reports said, as Citigroup sold some of its subsidiaries and cut an additional 6,000 staff to stem the tide of rising losses.
Citigroup’s India-born chief executive Vikram Pandit described the $2.5 billion loss as progress. In its earlier two quarterly reports, the group had booked losses of $9.8 billion and $5.1 billion respectively.
“We cut our second-quarter losses in half compared to the first quarter,” Pandit said in a statement. “While there is still much to do, we are encouraged by our progress.”
The bank has recorded over $56 billion in credit losses and write-downs in the last four quarters. Its share price has fallen nearly 70 percent since the credit market began to tighten.
In premarket trading Friday, Citigroup shares rose as high as $19.27, after closing Thursday at $17.97.
Pandit has put in motion sweeping asset sales to try to improve the company’s balance sheet and free the bank of its more risky assets.
The group said on Friday that it sold an additional $99 billion of assets in the quarter, and two-thirds of them were investments made under Pandit’s predecessor, Charles O. Prince III. The bank is also selling businesses like CitiCapital Diners Club International and its German retail banking unit.
Bank executives have said a recovery would take two to three years.
“This isn’t like a sprint. This really is a marathon,” Gary L. Crittenden, Citigroup’s finance chief, said last week.
Tags: 1 billion, asset sales, balance sheet, bank executives, citigroup, conglomerate, credit losses, crittenden, diners club international, finance chief, first quarter, marathon, predecessor, quarter losses, quarterly loss, quarterly reports, retail banking, risky assets, second quarter, share price