Citigroup has reported another big loss, although it lost less money than had been expected.
The biggest US bank by assets lost $2.5bn (£1.3bn) in the three months to the end of June, weighed down by another $11.7bn of write-downs.
Citigroup said it had cut 11,000 jobs in the first six months of the year and planned to continue at the same rate.
Related article: US: Financial system is a house of cards
The company’s shares rose 7.7% to close at $19.35, following the smaller-than-expected losses.
It is Citigroup’s third consecutive quarter of losses, following shortfalls of $5.11bn and $9.83bn.
The losses spring from problems in the credit markets because of uncertainty about the value of mortgage-backed debt issued by US banks.
It has left banks worldwide reluctant to lend money to each other, because they are uncertain about whether the other banks are creditworthy and whether they will need the money themselves.
The credit market turmoil has forced the industry to axe thousands of jobs as it attempts to reduce costs, with more cutbacks expected in the year ahead.
Chief executive Vikram Pandit said: “While there is still much to do, we are encouraged by our progress.”
An element of bad news in the three-month results is that Citigroup’s credit costs have jumped to $7.2bn, as more of its own customers are defaulting on their loans.
That means that while the losses from mortgage-backed debt may be slowing, the losses from Citigroup’s own mortgages, car loans and credit cards are growing.
But some analysts believe there could be light at the end of the tunnel.
“While several global or major national banks delivered lousy earnings, the mortgage or credit market related write-offs weren’t nearly as bad as expected and appear to be lessening,” said Fred Dickson, an analyst at DA Davidson & Co.
Friday, 18 July 2008
Source: BBC News
Related articles and videos:
– FREDDIE & FANNIE UNCONSTITUTIONAL BAIL OUT USING WHAT?
– Fed: No more bailouts, except Fannie Mae and Freddie Mac
– The Wall Street Journal Senses Something is Wrong
– US faces global funding crisis, warns Merrill Lynch
– Ron Paul on Fox Business News 7/16/08
– Ron Paul vs. Ben Bernanke 7/16/08
– US: $455,000 debt per household
– US: Total Crash of the Entire Financial System Expected, Say Experts
– The Dollar is doomed and the Fed will fail
– More Than 300 US Banks to Fail, Says RBC Capital Markets Analyst
– Are “Dark Pools” Destined to be the Capital Markets’ Next Black Hole?
– Run on banks spells big trouble for US Treasury
– Fannie, Freddie insolvent, Poole tells Bloomberg
– Chinese Government is Top Foreign Holder of Fannie Mae, Freddie Mac Bonds
– Foreclosures Rose 53% in June, Bank Seizures Triple
– Small Banks: Billions in Troubled Construction Loans
– Financial market losses could top 1,600 billion dollars: report
– Dow suffers worst 1st half since ‘70
– Fortis Bank Predicts US Financial Market Meltdown Within Weeks
– Barclays warns of a financial storm as Federal Reserve’s credibility crumbles
– Jim Rogers: Avoid The Dollar At All Costs
– Ron Paul on Iran and Energy June 26, 2008
– Marc Faber: ‘Misleading’ Fed Should Let Banks Fail
– This recession could easily tip into a depression
– Status Report on the Collapse of the U.S. Economy