Citigroup Inc., the nation's largest bank by assets, reported the company's biggest quarterly loss and slashed dividends on Tuesday as loan defaults in recent quarters forced it to write down the value of subprime-mortgage investments by $18 billion.
The New York-based bank reported an overall fourth quarter loss of $9.83 billion, or $1.99 a share, compared with a profit of $5.1 billion, or $1.03, a year earlier.
Citi also announced in the statement today a bigger-than-expected write down of $18.1 billion, a 40 percent cut in the company's dividend, and a $12.5 billion infusion from investors in Kuwait, Singapore and the state of New Jersey.
The bank reduced its quarterly dividend to 32 cents from 54 cents per share.
The results twice as bad as forecast, according to earnings tracker Thomson Financial.
Analysts had expected the company to report a loss of $1 a share, on revenue of $10.64 billion.
Our financial results this quarter are clearly unacceptable. Our poor performance was driven primarily by two factors â€“ significant write-downs and losses on our sub-prime direct exposures in fixed income markets, and a large increase in credit costs in our U.S. consumer loan portfolio, said Vikram Pandit, Chief Executive Officer of Citigroup in a statement.
Pandit replaced former CEO Charles Prince in December after he stepped down amid mounting subprime losses.
Citigroup dived 47 percent in New York Stock Exchange composite trading over the past year.
Citi shares fell 3.4 percent to $28.02 in pre-market trading Tuesday.
Citi said the write down for subprime home loans and related securities was almost double what it expected in November. The bank also noted it set aside $4.1 billion more in the fourth quarter of 2007 to cover loan losses.
We are taking actions to enhance our risk-management processes and to improve expense productivity, Pandit added.
Citigroup's markdown is the biggest so far for the financial sector, surpassing the $14 billion reported by Zurich-based UBS AG, Europe's biggest bank. Merrill Lynch, JPMorgan Chase and Washington Mutual are all slated to report quarterly results later this week.