Citigroup loses $5.1B, will cut 9,000 jobs

NEW YORK -- Citigroup c said Friday that it lost $5.1 billion during the first quarter and will eliminate about 9,000 more jobs, as poor bets on mortgages and leveraged loans lopped billions of dollars from its investment portfolio.

Write-downs related to mortgages and turmoil in the credit markets reached about $12 billion, and costs stemming from consumers' credit problems surpassed $3 billion, the bank said Friday. And in a conference call with analysts, Citigroup Chief Financial Officer Gary Crittenden said the bank, seeking to cut costs, is cutting about 9,000 additional jobs.

That means Citigroup is cutting 13,200 jobs in all. In January the bank said it was cutting 4,200 jobs.

The most recent quarterly shortfall at the nation's biggest bank by assets was not as massive as the nearly $10 billion loss it suffered in the fourth quarter of last year, though.

Citigroup shares rose as many investors had been bracing for even more dismal results. Citigroup's stock has fallen 18% since the beginning of the year.

"It's a cathartic quarter," said Arthur Hogan, chief market analyst at Jefferies & Co in Boston. "Vikram Pandit is coming in and making pretty big changes."

But 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, had expected the New York bank to lose 95 cents a share, according to a Thomson Financial survey.

With big exposure to mortgages and leveraged loans, Citigroup remains at risk for further write-downs. The credit ratings agency Moody's Investors Services on Friday changed its ratings outlook on Citigroup to negative, citing write-downs that were on the high side of its estimates.

In the first quarter, before taxes, Citigroup took $6 billion in write-downs and credit costs on exposure to subprime mortgages; $3.1 billion in write-downs on funded and unfunded highly leveraged finance commitments; a downward credit value adjustment of $1.5 billion related to exposure to bond insurers; $1.5 billion in write-downs on auction-rate securities; and $3.1 billion in credit costs for consumers around the world.

Still, those write-downs were smaller than the $18.1 billion in write-downs it marked after the fourth quarter.

Citigroup has lost close to $15 billion in the last two quarters, and has suffered more than $46 billion in write-downs and increased credit costs since the middle of 2007.

And in another positive sign for investors, 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 Vikram Pandit, a former Morgan Stanley investment banker, as it scrambles for cash.

In December and January, Citi raised more than $30 billion through sales of assets and stock to outside investors, some of which have been funds run by Asian and the Middle Eastern governments. It also has been cutting costs through eliminating jobs — 4,200 job cuts were announced in January — and has been reorganizing the bank's various businesses.

"We are taking the necessary steps to make Citi more efficient while fostering a culture of accountability and teamwork," Pandit said. "As we move into the second quarter and beyond, we will continue to divest non-strategic assets and allocate capital to the products and regions that will drive increased revenues, enhance the value of our franchise, and ultimately, maximize shareholder value."

The Financial Times reported Friday that Pandit vowed to cut costs 20%.