Citigroup, which is the nation’s largest banking company by assets has set Wall Street’s financial worries at rest, by posting a smaller than expected loss. Citigroup posted a $ 2.5 billion second quarter loss, after nine months in the red. Citigroup’s stock rose nearly 8%, while companies like JP Morgan Chase & Co and Wells Fargo & Co. did not manage a profit gain compared to last year, and Merrill Lynch & Co reported a wider than expected quarterly loss. Financial experts are expecting Wachovia Corp. as well as Washington Mutual Inc. to report losses and Bank of America a steep profit decline.  

 Even a year after the crisis began its tricky trying to determine the dollar value of certain goods that are backed by debt, felt Prakash Shimpi, who works in the risk management practice at Towers Perrin. "I don't think anyone's breathing too easily right now," he said.

Citigroup’s global empire spans more than 100 countries and more than half its retail 8,300 branches are in countries other than the U.S. and there are fears than similar problems could arise there too. Home mortgages and credit card loans are like in the United States not doing well in countries like Mexico, Brazil and India. Executives at Citicorp feel it’s too soon to tell how much the problems might spread. Other American companies that rely on earnings from overseas could feel the heat particularly when times are lean at home.

Gary L. Crittenden, the chief financial officer of Citigroup said, “We have clearly had some deterioration in credit internationally, that’s not isolated to Citigroup, that’s a broader question.” Shares of Citigroup rose by $ 1.38 about 8% after the news and the stronger than anticipated earnings by JPMorgan Chase and Wells Fargo, helped raise the Standard & Poor’s stock index by 21 points or 1.7 % for the week, after a six week losing phase.  

Stuart Plesser, the banking analyst at Standard & Poor’s Equity Research said, “Investors are happy that the write-downs are under control, that’s what’s driving Citigroup’s price now — their write-downs.”

Citigroup’s chief executive, Vikram S. Pandit, looked at the $2.5 billion loss as a sign of progress, when compared with last quarter’s loss of $5.1 billion.

“The epicenter, if you like, of the problems in the economy is in the U.S. at the moment, but we’re looking for a slowdown across the board. While growth is still quite strong in a lot of these economies, they are running into stronger headwinds,” said Paul Sheard, global chief economist at Lehman Brothers.