Citigroup lops off $14 billion in investments during quarter
NEW YORK — Citigroup Inc. said Friday that it will eliminate about 9,000 more jobs, after loan defaults and the tumultuous credit markets lopped $14 billion in value from its investments during the first quarter.
That write-down, plus more than $3 billion in costs related to consumers’ credit problems, led Citigroup to a quarterly loss of $5.1 billion.
Citigroup has announced 13,200 job cuts since last summer, when the credit crisis began to slam the banking industry. The bank announced 4,200 cuts in January.
In March, the company said it would lay off 159 employees at its home equity loan group in O’Fallon, Mo. CitiMortgage employs more than 3,500 people in O’Fallon.
On Friday, the company did not provide specifics about where jobs would be cut. However, more are expected companywide.
"We’re very, very focused on efficiency," Chief Executive Vikram Pandit said.
The most recent quarterly shortfall at the nation’s biggest bank by assets was not as large as the nearly $10 billion loss it suffered in last year’s fourth quarter.
Citigroup shares gained nearly 4.5 percent, or $1.08, to $25.11 in trading Friday, as many investors had anticipated even more dismal results. Citigroup’s stock is down 12 percent since the beginning of the year.
Citigroup essentially lost in the first three months of the year, $1.02 a share, what it made in the same period in 2007 — $5 billion, or $1.01 a share. Analysts, on average, expected the New York bank to lose 95 cents a 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 payday advance lender.
With its significant exposure to problematic mortgages and leveraged loans, Citigroup remains at risk for further write-downs. 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 the future.
"There’s always the prospect that you’ll have additional marks," said Citi’s chief financial officer, Gary Crittenden.
Still, the $14.1 billion in write-downs were smaller than the $18.1 billion it marked down after the fourth quarter.
And in another positive sign, 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 revenue was padded by its global consumer segment and its global wealth management business.
The bank ousted CEO Chuck Prince late last year and promoted Pandit, a former Morgan Stanley investment banker, as it scrambled for cash. In December and January, Citi raised more than $30 billion through sales of assets and stock to outside investors. It also has slashed costs and reorganized the bank’s mortgage business and wealth management unit.
Like other banks, Citigroup still faces a deteriorating environment for consumer lending: Charge-off rates are climbing for mortgages, credit cards, auto loans and other types of loans.
JERRI STROUD OF THE POST-DISPATCH CONTRIBUTED TO THIS REPORT.