NEW YORK Citigroup Inc (C.N), the largest U.S. bank, on Friday posted a $2.5 billion second-quarter loss, suffering write-downs and credit losses tied to deteriorating credit markets and the slumping economy.
The net loss totaled 54 cents per share, and compared with a year-earlier profit of $6.23 billion, or $1.24 per share.
Citigroup said its loss from continuing operations was $2.22 billion, or 49 cents per share.
The loss was narrower than a consensus analysts' forecast of a 67 cent loss, according to Reuters Estimates.
Citi's results had been widely anticipated in markets globally, and the response the figures was swift.
U.S. equity index futures, which had been lower following a spate of earnings disappointments late Thursday from Google (GOOG.O), Microsoft (MSFT.O) and Merrill Lynch MER.N, turned positive, and the dollar strengthened broadly. U.S. Treasury debt prices fell, losing some of the flight-to-safety bid they'd had overnight, pushing the yield on the benchmark 10-year U.S. Treasury note US10YT=RR back over 4 percent.
The following is reaction from industry analysts and investors:
ANDRE BAKHOS, PRESIDENT OF PRINCETON FINANCIAL GROUP,
PRINCETON, NEW JERSEY:
"With Citigroup reporting a smaller-than-expected loss, it appears the worst may be over in the subprime mess. So when you look at these bank companies, they look like they are okay.
"It appears investors and analysts have overcompensated for the downside. With the fed willing to help, I guess for now there appears to be a bandage on the wound."
JONATHAN MONK, SENIOR PORTFOLIO MANAGER AT AERION FUND
"In an environment where sentiment is against these stocks, we're going to see a relief rally. Despite Merrill, the sector as a whole has done better than people's worst fears. It shows that new CEO Vikram Pandit seems to be doing the right things and is starting to build a base at Citi."
MANOJ LADWA, DERIVATIVES DEALER, TRADINDEX, LONDON
"They've come in a lot better than expected, which is great for the market. Obviously if Citigroup had come in worse, it wouldn't bode well for the rest of the financial stocks. It provides a bit of relief especially after Merrill Lynch's figures yesterday."
MARTIN SLANEY, HEAD OF DERIVATIVES, GFT GLOBAL MAKETS,
"The net share loss...is coming in better than consensus. Citigroup just because of the spread of their business is seen as a barometer of banking sector pretty much as a whole this day, certainly for U.S. banks and also the UK banks, so things aren't possibly as bad as have been priced in. It's going to help UK banks ... But we've still got plenty of second quarter earnings season to go, so possibly next week it will be a different story."
STEPHEN POPE, CHIEF GLOBAL MARKET STRATEGIST CANTOR
FITZGERALD EUROPE, IN LONDON
"I am pleased to see income from "Wealth Management" improve as I believe that for a bank like Citi this is a crucial forward looking area for revenue generation...transactional based revenue will become harder to achieve in the quarters ahead."
(Reporting by Dominic Lau, Patrizia Kokot and Sitaraman Shankar in London and Ellis Mnyandu in New York)