The Big Citi

NEW YORK (MarketWatch) -- Citigroup Inc. reported Friday another oversized quarterly loss as the company wrote down about $12 billion of soured mortgage investments and other credit-related items while adding to reserves for further losses on consumer loans.
Citi had a net loss of $5.1 billion, or $1.02 a share, in the first quarter. This compares with a profit of $1.01 a share generated in the first three months of 2007.
It marked the second consecutive quarterly loss for Citi.
However, shares of the Dow Jones Industrial Average rose more than 5% in pre-open trading to $25.42 as the results were generally in line with the wide range of analyst setimates. Investors appeared to welcome the aggressive writedowns.
"Valuations of our subprime-related exposures in fixed-income markets and leveraged-finance assets have further declined and credit costs in our consumer-lending businesses have increased," CEO Vikram Pandit said in a press release.
Reiterating comments he made to the Financial Times newspaper on Thursday, Pandit promised analysts and investors in Friday's release that: "As we move into the second quarter and beyond, we will continue to divest non-strategic assets and allocate capital to the products and regions that will drive increased revenues, enhance the value of our franchise, and ultimately, maximize shareholder value."
Pre-tax write-downs and credit costs on subprime-related direct exposures totaled $6 billion.
Citigroup also announced write-downs of $3.1 billion on funded and unfunded highly leveraged finance commitments, a downward credit value adjustment of $1.5 billion related to exposure to monoline insurers, write-downs of $1.5 billion on auction-rate securities inventory, and a $3.1 billion increase in credit costs in its global consumer business.

First-quarter revenue fell 48%, to $13.22 billion. Analysts polled by Thomson First Call had expected a loss of 95 cents a share, on revenue of $12.8 billion.
Citigroup said it trimmed its credit exposure to direct subprime securities in the first quarter to a little more than $29.1 billion from $37.3 billion at the end of 2007.
At the end of the first quarter, Citigroup said it had $6.4 billion of gross lending and structuring exposures.
The bank's U.S. consumer buisness generated 3% revenue growth for the latest quarter, aided by gains from the sale of shares in MasterCard Inc., which rolled out a successful initial public offering recently.
Revenue grew 3% due to a 4% increase in average deposits, a 9% increase in average managed loans and a $349 million pre-tax gain on Visa shares, offset by lower securitization results in cards, Citigroup said.
Excluding the gain on Visa shares and a $161 million pre-tax gain on the sale of MasterCard shares in the first quarter of 2007, revenue was 1% higher. Expenses rose 6% at the unit, while credit costs increased by $2.3 billion.

Higher delinquencies
The bank cited higher delinquencies on mortgages, unsecured personal loans, credit cards and auto loans.
Meanwhile, Citigroup's alternative investments business posted a loss of $509 million in the first quarter, and had revenue of negative $358 million as proprietary trading tanked and management took mark-to-market losses on its structured investment vehicles.
"The net loss was driven by the lower revenues and a $202 million write-down of the multi-strategy hedge-fund intangible asset related to Old Lane," Citigroup said.
Greg Morcroft is MarketWatch's financial editor in New York.