(Adds analyst comments, updates share price)
Oct 22 Citigroup Inc (C.N) sees rising losses
as the credit situation facing the consumer continues to
deteriorate, said prominent banking analyst Meredith Whitney,
after meeting with the bank's chief financial officer on
Shares of Citigroup fell as much as 5 percent to $13.44 in
early morning trade on Wednesday, as the Oppenheimer & Co
analyst became the latest among prominent Wall Street analysts
to turn negative on the bank's outlook.
Analyst Whitney said she continues to believe that outsized
expenses and negative operating leverage represent the largest
challenge for Citigroup.
"We have and continue to believe consumer liquidity will
continue to be squeezed, we are no more encouraged after
today's meeting," Whitney, who met with Citigroup CFO Gary
Crittenden, wrote in a Oct 21 note to clients.
She 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
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.
On Tuesday, Goldman Sachs analyst William Tanona said
Citigroup was unlikely to turn profitable over the next 12
months mainly because of additional write-downs and a
deteriorating credit market.
Tanona's comments came shortly after Merrill Lynch analyst
Guy Moszkowski's statement last week that Citigroup's negative
credit outlook was enhanced by tough investment banking
Citigroup, however, remains focused on reducing legacy
assets, right-sizing businesses and mitigating risk, Whitney
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."
"It seems that increased capital flexibility will go
towards the corporate loan market first in the first major step
toward re-intermediating the capital markets," Whitney added.
The analyst rates the stock "underperform."
Shares of Citigroup were trading down 6 cents at $14.12 in
morning trade on the New York Stock Exchange.
(Reporting by Tenzin Pema in Bangalore; Editing by Jarshad