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NEW YORK : Citigroup Friday posted a 2.495 billion dollar quarterly loss 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 54 cents a share, was somewhat better than anticipated on Wall Street, where analysts had been expecting a deficit of 61 cents a share.
Citi, one of the world's biggest banks, said it wrote off an additional 7.2 billion dollars in securities and banking, largely from soured property market bets, bringing its total to some 50 billion dollars since the onset of the sub-prime crisis.
"Citi has taken more write-downs than any other firm since the credit crisis began," said analysts at Briefing.com, 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 4.89 billion dollars and write-offs of more than nine billion.
But analysts pointed out that 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 centre 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 6.2 billion dollars in the same period a year earlier.
Revenues for the second quarter fell 29 percent to 18.7 billion dollars, hurt by the writeoffs.
Vikram Pandit, the chief executive named in December in a shakeup following hefty losses, said the banking firm has made progress in cleaning up its finances and shoring up capital through sales on non-core operations.
"We continue to demonstrate strength in our core franchise," he said.
"We cut our second-quarter losses in half compared to the first quarter. The cost of credit increased by 20 percent from the first quarter, but write-downs in our Securities and Banking business dropped by 42 percent. Additionally, headcount and expenses declined sequentially. While there is still much to do, we are encouraged by our progress in delivering on our commitment to the re-engineering efforts."
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.
Citi shares leapt 7.7 percent to close at 19.35 dollars. Merrill Lynch added 0.6 percent.
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 2008. The restructuring has slashed the company's assets by some 99 billion dollars.
- AFP /ls
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