After Merrill Lynch losses and job cuts, Citi loses $5.11 billion in Q1; to cut 9,000 jobs

18 April 2008

Mumbai: Bank results season in the US continued with the largest of them – Citigroup Inc. – declaring its quarterly results on Friday. This was the US bank's second consecutive quarterly loss, pummeled by more than $15 billion in write-downs and increased reserves for credit losses. Citi's results follow similar showings by other major US banks. (See: Merrill Lynch posts deep quarterly loss; to cut 10 per cent of workforce)  

Citi declared quarterly losses of $5.11 billion, or $1.02 per share, compared with a profit of $5.01 billion, or $1.01 per share, a year earlier. Revenue fell 48 per cent to $13.22 billion from the corresponding quarter in 2007.

This was slightly above analysts' estimates of around $11 billion, and, as a result, Citigroup shares went up by $1.43, or 6 per cent, to $25.46 in pre-market trading. It is still a far cry from the 52-week high of $55.53 scaled in May last year. The stock has lost more than half its value since then, a fact that prompted then CEO Charles Prince to step down.

Citi now plans to cut 9,000 jobs, as chief executive Vikram Pandit had vowed to make savage cuts in the bank's operations to streamline the bank's operations. Citi, which already cut 4,200 jobs in January, is now looking to slash its cost base further by as much as a fifth.

In a statement, Pandit said the results ''reflect the continuation of the unprecedented market and credit environment and its impact on our historical risk positions.'' Citi employs around 370,000 people worldwide, including about 11,000 in the UK.

Thousands of banking jobs are being axed as the investment banking industry struggles to cope with the deepening financial crisis.