Citigroup sees rising losses: analyst Whitney

(Reuters) - Citigroup Inc (C.N) sees rising losses as the credit situation facing the consumer continues to deteriorate, prominent banking analyst Meredith Whitney said, after meeting with the bank's chief financial officer on Tuesday.

"We continue to believe outsized expenses and negative operating leverage represent the largest challenge for the company, " the Oppenheimer & Co analyst, who met with Citigroup CFO Gary Crittenden, said.

Whitney expects the bank to post a loss of $2.87 a share in fiscal 2008, and a loss of $2.65 a share in fiscal 2009.

According to Reuters Estimates, analysts on average expect Citigroup to incur a loss of $2.24 a share in 2008.

Citigroup, the nation's largest bank by assets until the third quarter, had last week posted its fourth straight quarterly loss and $13 billion in write-downs and credit losses.

The bank is in a difficult spot as it is experiencing rising losses from traditional lending operations, such as U.S. credit cards, even as losses continue from repackaged mortgage debt and other securities on its balance sheet.

Citigroup, however, remains focused on reducing legacy assets, right-sizing businesses and mitigating risk, Whitney wrote in an Oct 21 note to clients.

She also said Crittenden was "...optimistic that the steps taken by the Treasury and government will restart the term-funding market, particularly for larger corporations and thus providing the real business economy a benefit."

The analyst rates the stock "underperform."

Shares of Citigroup closed at $14.18 Tuesday on the New York Stock Exchange.

(Reporting by Tenzin Pema in Bangalore; Editing by Jarshad Kakkrakandy)