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Citigroup posts $2.5b loss, but beats expectations
(Agencies)
Updated: 2008-07-18 23:43

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Citigroup Inc.'s securities and banking division wrote down the value of its assets by $7.2 billion, before taxes, and an asset revaluation cost its consumer lending business $745 million. Those write-downs totaling about $8 billion are significantly lower than write-downs taken in the first quarter and in last year's fourth quarter.

However, credit costs jumped to $7.2 billion as more consumers defaulted on their loans -- implying that while losses in the credit markets are decelerating, losses from actual defaults in Citigroup's mortgages, home-equity loans, auto loans and credit card lines are mounting.

The $7.2 billion in credit costs included $4.4 billion in credit losses and a $2.5 billion charge to bulk up reserves for future loan losses.

Citigroup has failed to turn a profit for three straight quarters, losing a cumulative $17.4 billion during that period after writing down its assets by about $46 billion. Its shares have tumbled 65 percent over the past year, and recently hit their lowest point since the day Citicorp and Travelers combined in October 1998.

But after better-than-expected results from two other big consumer banks this week -- JPMorgan Chase & Co. and Wells Fargo & Co. -- the market appears to be deciding that the prospect for the ailing financial sector may not be as dire as they feared.

Citigroup stock rose 90 cents, or 5.5 percent, to $17.34 in premarket trading.

Citigroup's results were helped by asset sales, lowered expenses, and record revenues in transaction services, interest rate and currency trading and commodities.

The bank has raised about $40 billion over the past several months by shedding businesses, lowering its dividend, and selling stock.