Citigroup Inc. today reported a US$5.1 billion first quarter net loss on continued writedowns.

The firm took another US$6 billion in pre-tax write-downs and credit costs on sub-prime related direct exposures. Its results also include write-downs of US$3.1 billion (net of underwriting fees) on funded and unfunded highly leveraged finance commitments, a downward credit value adjustment of US$1.5 billion related to exposure to monoline insurers, write-downs of US$1.5 billion on auction rate securities inventory, and a US$3.1 billion increase in credit costs in global consumer.

“Our financial results reflect the continuation of the unprecedented market and credit environment and its impact on our historical risk positions. During the first quarter, valuations of our sub-prime related exposures in fixed income markets and leveraged finance assets have further declined and credit costs in our consumer lending businesses have increased. Despite the negative factors in the broader markets, we continue to see strong momentum throughout the organization with robust volumes in many of our products and regions,” said Vikram Pandit, CEO of Citi, in a release.

“We have taken decisive and significant actions to strengthen our balance sheet, including over US$30 billion of capital raised during December and January, a significant increase in our credit reserves, the sale of Redecard shares, the recently announced divestitures of CitiCapital and Diners Club International, and the realignment of and pending asset reductions in our mortgage business,” Pandit added. He noted that it also continues to enhance risk management processes,capital productivity and expense control.

“As we move into the second quarter and beyond, we will continue to divest non-strategic assets and allocate capital to the products and regions that will drive increased revenues, enhance the value of our franchise, and ultimately, maximize shareholder value,” said Pandit.

Following the results, Fitch Ratings downgraded Citigroup’s long-term Issuer Default Rating and Citi’s Individual rating, while affirming the short-term IDR. The rating outlook is also negative.

Fitch said its downgrade stems from loss as well as a challenging financial outlook. “The potential depth of problems across Citi’s U.S. consumer portfolio will likely make a restoration of desirable financial metrics a 2009 event at the earliest. This comes on top of financial challenges in Citi’s securities and banking operations in both the near and intermediate terms as Citi looks to reduce problematic exposures, right size this business and focus activity on customer value-added transactions,” it added.

“The negative outlook reflects the difficult U.S. consumer credit environment, which will continue to affect overall earnings in the foreseeable future,” Fitch explained. “Exposures to other higher risk areas such as CDOs and leveraged finance, although significantly reduced, still cause concern. Overall, capital markets-related revenues are expected to remain well below normalized levels, given the ongoing market difficulties and sharp slowdown in deal flow. All in all, asset quality problems appear manageable, although the resolution of issues will take time. The depth of U.S. consumer portfolio stress could become clearer in coming months which may allow Fitch to resolve the rating outlook in the near-term.”

Despite all the gloom, Fitch added that Citi’s ratings continue to be underpinned by its solid funding structure and liquidity management as well as its diverse franchise by product and geography.