The following article was provided by Dennis Horman, Senior Mortgage Consultant with Fidelity Mortgage Capital:
"First quarter of 2008 for Citigroup, results in $5.1 billion loss after hefty write-downs.
During the first quarter Citigroup, Inc. lost $5.1 billion and will eliminate 9,000 more jobs.
The write downs related to mortgages and turmoil in the credit markets reached approximately $12 billion, and costs stemming from consumers' credit problems passed the $3 billion mark. Gary Crittenden the chief financial officer said that in seeking to cut costs, the company is eliminating about 9,000 additional jobs, bringing there total job cuts to about 13,200 since the first of 2008.
This latest shortfall at the nation's largest bank by assets was not as massive as the nearly $10 billion it lost in the fourth quarter of 2007. The company's shares jumped more than 6% or $1.52 to $25.55 at the open of trading on Friday, as many investors had been bracing for even more dismal reports. The stock has fallen 18% since the beginning of 2008.
Citigroup essentially lost in the first quarter of 2008, $1.02 per share, what it made in the same period in 2007 - $5 billion, or $1.01 per share. On average it was expected the New York Bank would lose 95 cents per share, according to Thomson Financial survey.
With its exposure to mortgages and leveraged loans, Citigroup remains at risk for further write-downs. The credit rating for Citigroup was lowered to negative on Friday by the agency Moody's Investors Services, citing the write-downs were on the high side of their estimates.
Late last year the bank ousted CEO Chuck Prince and promoted Vikram Pandit, a former Morgan Stanley investment banker, as it scrambles for cash. In December and January the bank raised over $30 billion through sales of assets and stock to outside investors, some of which have been funds run by Asian and the Middle Eastern governments. The bank has also slashed costs and reorganized it various businesses.
Friday it was reported by the Financial Times that Pandit had vowed to cut costs at Citigroup by 20 percent.
We will watch the markets and see what the second quarter of 2008 has to bring to Citigroup."
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