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Citigroup Reports Dismal 1st Quarter
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The company said it lost $5.1 billion in the first quarter, or $1.02 a share, on revenue of $13.2 billion. That compares with a profit of $5 billion on revenue of $25.46 billion a year earlier.
Vikram S. Pandit, Citigroup's chief executive, said the results reflected the "continuation of the unprecedented market and credit environment and its impact on our historical risk positions."
Pandit, 51, took the helm in December after Charles O. Prince III was forced to resign as losses mounted. Pandit reassured investors and analysts in a conference call that Citigroup was taking aggressive steps to strengthen its balance sheet, including the sale of its commercial lending and leasing unit to General Electric announced Wednesday.
Pandit has promised better oversight and greater efficiency as he works to get the firm back on track. While vowing to pursue growth opportunities in fast-growing markets, he has also focused on cost cutting and divested what he deems to be non-core businesses. Over the past several months, Pandit hired risk-management professionals and reorganized the bank to emphasize regional structure. It is a move meant to increase accountability.
Citigroup also said Friday that it would cut 9,000 jobs over the next 12 months, on top of the 4,200 cuts announced in the first quarter.
Byron MacLeod, an analyst with Gradient Analytics, called Citigroup's financial report "a mixed bag."
"Investors want to see aggressive action at this point," he said. "You want to make sure the company really cleans house. The provisions are a part of that. The layoffs are a part of that. They appear to be taking aggressive action taking the company in line with an ideal structure going forward."
MacLeod added, however, that investors should go in with "their eyes wide open." The bank will probably have to set aside more money for losses in 2008, MacLeod said, as more assets on its balance sheet go sour. That could lead to further earnings disappointments, he said.
William L. Walton, chairman and chief executive officer of Allied Capital, a business-development company in the District, agreed.
"The economy has yet to feel the full effect of the credit troubles that have occurred," he said. "There seems to be two markets here. The credit market, which is flashing red. And the equity market, which is simply volatile."
