Citigroup Posts Fourth Consecutive Quarterly Loss, Merrill Also Posts Loss
Citigroup Inc. posted its fourth straight quarterly loss on Thursday, hurt by more than $13 billion of credit costs and write-downs tied to complex and low-quality debt. Meanwhile, Merrill Lynch & Co reported a fifth straight quarterly loss as the credit crisis saddled the firm with at least $13.5 billion of write-downs.
Citigroup said it was making good progress on shedding assets and cutting costs. But tight credit conditions and potential recessions globally could cut into its other businesses, from retail brokerage to credit card lending.
"There will be two types of banks: those that survive and grab market share, and those that struggle," said Matt McCormick, a portfolio manager at Bahl & Gaynor Investment Counsel in Cincinnati.
"Citigroup is trying to position itself as being in the strong camp. But that doesn't make their job any easier. They have significant economic headwinds, and they have continued exposure to illiquid securities," McCormick added.
Citigroup's third-quarter results were similar to its forecasts in late September, and the company's shares were little changed in early trading on the New York Stock Exchange, down 7 cents at $16.16.
Citigroup has recorded more than $71 billion of credit costs and write-downs over the last five quarters, which have forced it to raise more than $40 billion of capital from investors. Citigroup is also receiving $25 billion of capital from the U.S. Treasury under the Troubled Asset Relief Program, which should prevent the bank from having to raise capital for now, analysts said.
Merrill Lynch
Merrill Lynch & Co., the investment bank being taken over by Bank of America Corp., reported a fifth straight quarterly loss as the credit crisis saddled the firm with at least $13.5 billion of write-downs.
The third-quarter net loss of $5.15 billion was more than double the year-earlier deficit of $2.24 billion, Merrill said today. A onetime dividend payment to preferred shareholders widened the loss for common shareholders to $7.47 billion, or $5.58 a share. The average estimate of analysts in a Bloomberg survey was for a loss of $5.18.
Merrill Chief Executive Officer John Thain turned to Bank of America CEO Kenneth Lewis last month after a crisis of confidence in Wall Street firms forced Lehman Brothers Holdings Inc. into bankruptcy. Thain said today that the U.S. government plan announced this week to inject capital into banks and spur lending will "unlock'' credit markets.
The rescue effort "resolves the core issues with U.S. financial institutions,'' he said on a conference call with analysts. "I think you will gradually see credit conditions get better.''
Published on October 16, 2008
Are you a retail Agent Looking for a Quote?