Citi Sees More Writedowns Ahead

Citigroup(C Quote - Cramer on C - Stock Picks) is likely to take "substantial additional marks" on its existing subprime mortgage portfolio this quarter, CFO Gary Crittenden said Thursday.

The second-quarter writedowns, however, will probably not be as significant as the $12 billion in pretax writedowns Citi reported for the first three months of the year, he said.

"We do expect additional markdowns on our subprime positions," Crittenden told listeners on a conference call sponsored by Deutsche Bank(DB Quote - Cramer on DB - Stock Picks)."We expect them to be less than they were in the prior quarter, but still be substantial," he later added.

The comments pressured Citi shares down 80 cents, or 3.9%, at $19.60 in recent trading. Citi stock has lost more than 60% of its value over the past year amid the housing downturn and credit crunch.

Despite the anticipated writedowns, Crittenden maintained a revenue-growth target of 9% for the bank over the next two or three years. He said a key driver will be expansion within emerging markets and cross-selling a variety of financial services to new customers.

"This is obviously a challenging time in the industry overall," he said, "but a time that underlines the unique capabilities that the company has."

Lehman Brothers(LEH Quote - Cramer on LEH - Stock Picks) earlier this week reported a $2.8 billion second-quarter loss and Goldman Sachs(GS Quote - Cramer on GS - Stock Picks) and Morgan Stanley(MS Quote - Cramer on MS - Stock Picks) both reported smaller profits than a year ago, but managed to beat expectations.

Citi also announced on Thursday that it has agreed to purchase Intra SA Corretora de Câmbio e Valores, a Brazilian brokerage firm. In discussing future acquisitions and the challenges of folding them into Citi's large and complex network of businesses, Crittenden said the bank is not looking at major deals, but will not rule out small purchases in emerging markets.

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