UPDATE 2-Citigroup posts $5.11 billion first-quarter loss

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NEW YORK, April 18 (Reuters) - Citigroup Inc (C.N), the largest U.S. bank, posted its second straight quarterly loss on Friday, hurt by more than $16 billion in write-downs and increased costs related to credit losses.

The company recorded a first-quarter loss of $5.11 billion, or $1.02 per share, compared with a year-earlier profit of $5.01 billion, or $1.01 per share. Revenue fell 48 percent to $13.22 billion.

Analysts, on average, expected a loss of 96 cents per share on revenue of $14.35 billion, according to Reuters Estimates.

Though the loss was larger than expected, Citigroup shares rose $1.54, or 6.4 percent, to $25.57 in premarket trading.

"This is the quarter they get to clear the decks," said Arthur Hogan, chief market analyst at Jefferies & Co in Boston. "(Chief Executive) Vikram Pandit is coming in and making pretty big changes, and that's what he gets to do. It's a cathartic quarter."

Another lender with heavy debt exposure, Merrill Lynch & Co Inc MER.N set more than $6.5 billion of write-downs on Thursday.

Pandit is trying to focus on stronger businesses and cut costs, including jobs, after years of underinvestment and questionable risk management left Citigroup bearing the full brunt of the credit market crisis.

Expenses rose 4 percent to $16.22 billion, but fell 2 percent from the fourth quarter.

In the last two weeks, Citigroup has said it was selling its Diners Club International credit card network and most of its North American commercial lending and leasing business.

It has slashed its dividend and raised more than $30 billion in capital. It ended the quarter with a Tier-1 capital ratio of 7.7 percent, up from 7.12 percent at year-end, and well above the 6 percent that regulators consider "well-capitalized." The ratio measures the ability to cover losses.

Write-downs in the latest quarter included $6 billion tied to subprime mortgages, $3.1 billion for loans to fund corporate buyouts, $1.5 billion for exposure to bond insurers, $1.5 billion for auction-rate securities, $1 billion for below-prime "Alt-A" mortgages, and $600 million for commercial real estate.

The bank also incurred $3.1 billion of additional credit costs related to consumer lending.

"Results reflect the continuation of the unprecedented market and credit environment and its impact on our historical risk positions," Pandit said in a statement.

CAPITAL INCREASES

The investment bank, which suffered the brunt of the write-downs, posted a $5.67 billion loss.