Citigroup’s loss of $2.5 billion gives hope to its investors

“It appears the worst may be over in the subprime mess,” said Andre Bakhos, president of Princeton Financial Group in Princeton, New Jersey. “There appears to be a bandage on the wound.”

Citigroup’s loss from continuing operations was $2.22 billion, or 49 cents per share, while revenue declined 29 per cent to $18.65 billion.

The report followed surprisingly strong profits this week from JPMorgan Chase & Co and Wells Fargo & Co, and a much larger-than-expected $4.9 billion quarterly loss at Merrill Lynch & Co.

Citigroup eliminated 6,000 jobs during the quarter, and about 11,000 from January to June. It aims to keep cutting jobs at a similar rate, as chief executive Vikram Pandit tries to slash $15 billion of costs within two to three years.

“While there is still much to do, we are encouraged by our progress,” Pandit said in a statement.

Pandit has tried to focus on stronger businesses and cull $400 billion of risky or poorly performing assets after years of poor expense and risk management left the New York-based bank bearing the full brunt of the global credit crisis.

Citigroup has lost about $17.4 billion in the last three quarters and incurred more than $58 billion of write-downs and increased credit costs since the middle of 2007.

“Pandit seems to be doing the right things and is starting to build a base,” said Jonathan Monk, senior portfolio manager at Aerion Fund Management in London.