Skip to main content

Citigroup down $9.8B on home loans

  • Story Highlights
  • Citigroup loses $9.83 billion in fourth quarter on mortgage write-downs
  • U.S. bank's mortgage portfolio lost $18.1 billion in value
  • Bank raised $12.5 billion from investors in Singapore, Kuwait, New Jersey
  • Citi reduces quarterly dividend from 54 cents to 32 cents a share
  • Next Article in World Business »
Decrease font Decrease font
Enlarge font Enlarge font

NEW YORK (CNNMoney.com) -- Citigroup Inc. delivered some of the worst quarterly results in its history Tuesday, reporting a nearly $10 billion loss that was much worse than Wall Street had anticipated.

art.citigroup.gi.jpg

The financial giant also announced a writedown of $18.1 billion related to soured mortgage investments and a 41 percent cut to its dividend.

At the same time, it said it was receiving a $12.5 billion infusion from investors in Kuwait, Singapore and the state of New Jersey.

Citigroup shares gained 1.5 percent in pre-market trading on the news.

The company recorded a net loss of $9.83 billion, or $1.99 a share, in the fourth quarter. In the same period last year, the company reported a profit of $5.13 billion, or $1.03 per share.

Tuesday's results mark Citigroup's first quarterly loss since the merger of Citicorp and Travelers Group in 1998.

Citi's top line took a big hit. The company reported revenue of $7.2 billion for the quarter, down 70 percent from $23.8 billion a year earlier.

The results were far worse than forecast. Analysts had expected the company to report a loss of $1 a share on revenue of $10.64 billion, according to analysts surveyed by earnings tracker Thomson Financial.

"Our financial results this quarter are clearly unacceptable," said Citigroup CEO Vikram Pandit,

Pandit, who arrived in office a little over a month ago, blamed the company's grim results on subprime exposure in the company's fixed-income business, a surge in credit costs in its U.S. consumer loan portfolio and the staggering $18.1 billion writedown.

In November, when Citigroup announced the departure of former CEO Charles Prince, the company warned that it could writedown as much as $11 billion. Recent reports had estimated that Citi could writedown as much as $24 billion during the quarter.

Also hit hard was the company's consumer loan portfolio, which suffered a separate $4.1 billion hit due to higher credit costs.

Citi announced major restructuring moves Tuesday, including a reduction in the company's quarterly dividend from 54 cents to 32 cents a share, making it the latest financial institution to reduce its dividend payout. A cut in the dividend is often viewed as a sign that a firm is in financial trouble.

The New York-based firm also said it raised $12.5 billion in capital from outside investors. Two months ago, Citigroup sold a stake to the Abu Dhabi state investment fund in exchange for a $7.5 billion cash infusion.

Citigroup also said it would raise an additional $2 billion through the public sale of convertible preferred securities and would continue to sell some of its non-core assets. Recently it trimmed its stake in the Brazilian credit card issuer Redecard SA.

"We are taking comprehensive action to position Citi for the future with the capital strength that will allow us to refocus on earnings and earnings growth," Pandit said in a statement.

"In an uncertain environment, these actions put us on our 'front foot,' focused on capturing opportunities that earn attractive returns for our shareholders," the statement said.

There had been intense speculation recently that the company would take Tuesday's earnings as an opportunity to unveil major restructuring initiatives, including selling some non-critical assets or cutting the company's dividend.

Citigroup, however, did not announce any major job cuts. There had been intense speculation that the company could announce major cuts to its workforce of more than 300,000, on top the 17,000 workers it said it would eliminate from its payroll last spring.

Citigroup kicks off what will be a particularly busy week for the financial sector as Merrill Lynch, JPMorgan Chase and Washington Mutual are all slated to report quarterly results this week.

Citigroup's stock endured one of its worst annual performances on record last year and was the worst performing Dow component in 2007. Its shares finished the year down 47 percent. E-mail to a friend E-mail to a friend

  • E-mail
  • Save
  • Print