Citigroup Inc posted a quarterly per-share loss as it suffered $8 billion of credit losses, raising questions about when the bank can return to sustained profitability.
Analysts had expected the bank to post an even bigger loss, but its shares were down 4.4 percent in early trading.
On first blush, this is not particularly optimistic, said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, New York. They did beat on earnings and revenue, but the $8 billion credit losses ... is a reminder that we are in a weak economic environment.
Citigroup, which has posted more than $100 billion of writedowns and consumer credit losses since the credit crisis began, posted a third-quarter net loss to shareholders of $3.2 billion, or 27 cents a share, compared with a loss of $2.9 billion, or 61 cents a share, in the third quarter last year.
The net loss to shareholders compares with analysts' average forecast for a loss of 38 cents a share.
The bank reported net income of $101 million, which excludes preferred stock dividends and a $3.1 billion item linked to Citigroup's converting preferred shares into common stock. That figure compares with a loss of $2.8 billion in the same quarter last year.
The bank said revenue in its securities and banking unit dropped by about a third, to $4.89 billion. Excluding the impact of an accounting loss from improved credit spreads, the unit's revenue was $6.6 billion.
Major competitors including JPMorgan Chase & Co and Goldman Sachs Group Inc posted big increases in investment banking revenue.
Citigroup's net revenue rose 25 percent from a year earlier to $20.39 billion.
Total assets rose 2 percent from the second quarter, to $1.89 trillion.
Chief Executive Vikram Pandit has struggled to fix a bank formed through decades of acquisitions that resulted in a hodgepodge of fiefdoms. He has tried to shed bad assets and focus on Citigroup's main businesses, including international commercial and investment banking.
Some critics have accused Pandit of being slow to deliver results. Citigroup has been bailed out three times by the U.S. government, including $45 billion of capital from the Troubled Asset Relief Program and a preferred share exchange that left taxpayers holding about a third of the company.
In a conference call, Citigroup Chief Financial Officer John Gerspach declined to comment on a possible timetable for repaying TARP funds. But he insisted the bank had the capacity to begin to repay TARP and that it was just a question of when.
Pandit's relationship with regulators has been described by people inside the bank as sometimes contentious. But at a public event last month, Pandit said the bank was executing on its strategy, and as long as the company keeps executing, all the noise will disappear.
Citigroup shares are down 29 percent this year, compared with a 9 percent rise in the KBW Bank index .BKX and a 48 percent advance by shares of Citigroup rival JPMorgan Chase & Co.
HOLDINGS AND CORP
Citigroup earlier this year separated the businesses it wanted to keep, which it calls Citicorp, from the units and assets it aims to shed, which it calls Citi Holdings.
Regulators have sometimes pressed the bank to shed businesses it might otherwise want to keep.
Some regulators, for example, have pressed Citigroup to shed its Mexican unit, Banamex. So far, the bank has kept that business and has not put it up for sale.
But Citigroup did not manage to hang onto its Phibro energy trading unit, a profitable business that came with a huge political liability -- star trader Andrew Hall's employment contract. Hall could have been entitled to about $100 million in pay in 2009 after a similar payout in 2008, drawing the scrutiny of U.S. pay czar Kenneth Feinberg.
The bank said last week it was selling Phibro to Occidental Petroleum Corp at a price widely seen as a pittance.
As Citigroup has struggled to post a profit from its main operations, instead of from one-time gains and other accounting moves, government pressure on its management -- and on Pandit in particular -- has mounted.
(Reporting by Dan Wilchins; editing by Dave Zimmerman and John Wallace)