Citigroup reports $10.6b loss in fourth quarter

NEW YORK: Battered financial giant Citigroup said yesterday it suffered a net loss of US$7.6 billion (S$10.6 billion) in the fourth quarter of last year, resulting in a full year loss of US$1.6 billion.

Citigroup said its fourth quarter revenues were US$5.4 billion, or US$15.5 billion excluding a repayment of a government bailout loan, down from US$20.4 billion in the prior quarter.

The quarterly result amounted to a loss of 33 US cents a share, in line with forecasts by Wall Street analysts.

Citigroup, which is the last of the major money-centre banks operating in the shadow of a United States government bailout, last month repaid some US$20 billion to the authorities.

It repurchased preferred shares from a US Treasury investment in the company through the Troubled Asset Relief Programme, a massive US$700 billion effort to stabilise the financial system.

But the government still holds a major stake in Citigroup from having converted some of its investment to common shares.

Citigroup said provision for loan losses in the fourth quarter was US$8.2 billion, down 36 per cent from the prior year and 10 per cent from the previous quarter.

'It's been a tumultuous two years,' said Mr William Fitzpatrick, a financial industry analyst with Optique Capital Management in Racine, Wisconsin.

'They're probably done capital-raising, and investors now want some visibility on what the earnings power is.'

Citigroup may spend most of this year recovering from the bailout, grappling with more loan losses and pushing to sell or wind down unwanted businesses with more than US$600 billion of assets, or a third of the bank's total.

Chief executive Vikram Pandit said a series of steps was taken to get the 'house in order', citing improved capital strength, reduction in company size and staff, refocused business strategy and an overhauling in risk management that cut costs by more than US$13 billion annually.

'As we enter 2010, we are strongly capitalised, significantly more efficient, and are executing on a clear strategy that is focused on clients,' he said.

Mr John Gerspach, Citigroup's chief financial officer, said although the company remained cautious and continued to monitor the future impact of its 'loss mitigation' efforts, there were 'indications that credit may be stabilising or improving, particularly in Asia and Latin America'.

Last week, JPMorgan Chase opened the US earnings season for banks, quadrupling its fourth quarter net earnings to US$3.27 billion and doubling its profits for the full year to US$11.7 billion.

AGENCE FRANCE-PRESSE, BLOOMBERG

Source: Straits Times, 20 Jan 2010.

Comment by Property Maestro (PM):

This serves as a timely reminder to all that Citibank and its parent, Citigroup, is not out of the woods, yet, tiger.

Contrary to all appearances, bear in mind that it has been crippled due to its own excesses. This monolith has begun to live off its fat, and when liposuction is performed on it, begins to leak.

Stand clear of the ooze and discharge from its pores...