Citigroup posted a US$2.495 billion quarterly loss on Friday on more hefty real estate write-offs in results not as bad as feared, as markets mulled prospects for an end to the banking sector’s woes.
The loss, amounting to US$0.54 a share, was somewhat better than anticipated on Wall Street, where analysts had been expecting a deficit of US$ 0.61 a share.
Citi, one of the world’s biggest banks, said it wrote off an additional US$7.2 billion in securities and banking, largely from soured property market bets, bringing its total to some US$50 billion since the onset of the subprime crisis.
“Citi has taken more write-downs than any other firm since the credit crisis began,” analysts at Briefing.com said, adding that the latest results “were ahead of the average analyst estimate and an improvement over the previous quarter.”
The results contrasted with those of investment giant Merrill Lynch, which on Thursday announced a loss of US$4.89 billion and write-offs of more than US$9 billion.
But analysts said the banking sector appears to be coming clean and nearing the end of a cycle of losses linked to risky bets on real estate.
Earlier this week, JPMorgan Chase and Wells Fargo topped Wall Street estimates and posted profits.
“Investors should feel at least slightly relieved that while several global or major money center national banks delivered lousy earnings, the mortgage or credit market related write-offs weren’t nearly as bad as expected and appear to be lessening,” said Fred Dickson, analyst at DA Davidson & Co. “Analysts appeared to have overestimated the losses of these banks or misjudged the ability of the banks to offset some of the write-offs with income from fees and normal lending activities. Predictably, short-sellers of these banks moved to partially cover their positions and natural buyers stepped in once the earnings reports hit the tape.”
For Citibank, the net loss marked a sharp turnabout from a profit of US$6.2 billion in the same period a year earlier.
Revenues for the second quarter fell 29 percent to US$18.7 billion, hurt by the write-offs.
Citigroup shares have plunged over 60 percent in the past year on fears of further losses from the US housing meltdown, but have rebounded in recent weeks.
Citigroup company has offloaded its pension arm CitiStreet and its German retail banking operations, among others, to raise cash.
As part of the shakeup, Citi shed some 6,000 jobs in the past quarter, bringing to 11,000 its cuts since the start of this year. The restructuring has slashed the company’s assets by some US$99 billion.
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