Friday, troubled financial services giant Citigroup Inc. (C) reported a net loss of $8.29 billion, its fifth consecutive quarterly loss, hurt mainly by write-downs and losses in Securities and Banking, net credit losses, and a $6 billion net loan loss reserve build. On a year-over-year basis, the bank's net loss narrowed from the prior-year quarter.
The bank also said that it will realign into two businesses, Citicorp and Citi Holdings, for future profitable growth. The bank has also reached an agreement with the U.S. Government on the loss sharing program.
Citigroup's net loss for the quarter was $8.29 billion, or $1.72 per share, compared with a net loss of $9.83 million, or $1.99 per share, a year ago. Loss from continuing operations reached $12.14 billion, or $2.44 per share, wider than last year's loss from continuing operations of $10.03 billion, or $2.03 per share.
On average, analysts polled by First Call/Thomson Financial expected the bank to post a loss of $1.31 per share in the fourth quarter on revenues of $14.16 billion. Analysts' estimates typically exclude one-time items.
Citigroup said the results reflected the negative impact of $7.8 billion in revenue marks in Securities and Banking, a $5.3 billion downward credit value adjustment on derivative positions, excluding monolines, $2.5 billion of losses in private equity and equity investments, $2.0 billion of restructuring costs, and a $6.0 billion net loan loss reserve build.
Quarterly revenues totaled $5.6 billion, down 13% from $6.42 billion in the prior-year quarter. Citigroup said the revenues across all businesses reflected the impact of a difficult economic environment and weak capital markets.
"Our results continued to be depressed by an unprecedented dislocation in capital markets and a weak economy," said Vikram Pandit, Chief Executive Officer of Citi.
The bank said it reduced headcount by approximately 29,000 since the third quarter of 2008 and approximately 52,000 in the full-year 2008.
On January 13, Citigroup announced the Morgan Stanley Smith Barney Joint Venture. The bank will exchange Smith Barney for a 49% stake in the JV and a $2.7 billion cash payment. The transaction is expected to close in the second half of 2009. The bank also estimates that the transaction will result in a pre-tax gain of approximately $9.5 billion, or about $5.8 billion after-tax.
In a separate release, Richard Parsons, Lead Director for Citi, said that there has been one announced departure from the Board. "Together with other anticipated departures, this gives us the opportunity to reconstitute the Board and we will do so as quickly as possible," Parsons added.
The bank also said that it will realign into two businesses, Citicorp and Citi Holdings, to optimize the company's global businesses for future profitable growth and opportunities. Citicorp will focus on leveraging the competitive advantages of the company's global universal bank in more than 100 countries. Meanwhile, Citi Holdings, which will be made up of brokerage and retail asset management, local consumer finance and a special asset pool, will focus on tightly managing risks and losses, and maximizing the value of the assets.
Further, the bank said it has entered into definitive agreements with the U.S. Department of Treasury, The Federal Deposit Insurance Corporation, and the Federal Reserve Bank of New York with respect to the loss sharing program previously announced on November 23, 2008.
Going ahead, the bank sees reduced volatility from marks in 2009 as a result of the actions it took to reduce risk, and reclassify certain securities and loans from trading and available or hold for sale to hold to maturity or held for investment.
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