April 20 (Bloomberg) -- Citigroup Inc.’s credit losses are growing at a “rapid rate,” undermining Chief Executive Officer Vikram Pandit’s efforts to stabilize the U.S. bank, according to Goldman Sachs Group Inc.

While Citigroup posted first-quarter net income of $1.6 billion last week, the New York-based bank suffered an “underlying” loss of 38 cents a share, Richard Ramsden, a Goldman Sachs analyst, wrote in a research note dated yesterday. He repeated a “sell” rating on the stock.

Citigroup, which received $45 billion in government aid, ended a five-quarter losing streak on trading gains and an accounting benefit for companies in distress. The bank, which cut compensation costs and took fewer writedowns, still reported higher delinquencies on home and credit-card loans.

The results “included several one-time items which muddied the waters,” Ramsden wrote in the note. “The key question mark in our mind remains what Citi’s earnings power will be on the other side of the crisis.”

Citigroup fell 48 cents, or 13 percent, to $3.17 at 10:29 a.m. in New York Stock Exchange composite trading. The shares had dropped 46 percent this year before today.

Ramsden halved his estimate for Citigroup’s 2009 loss to 25 cents a share, while keeping unchanged his forecast for net income of 20 cents a share for 2010. He expects the bank to earn 40 cents a share in 2011. The analyst kept a 12-month price target for the stock of $1.50.

Bank of America

Bank of America Corp. today reported that reserves for future loan losses surges 57 percent to $13.4 billion since the end of December. Charge-offs for uncollectible loans more than doubled to $6.94 billion from the same period a year earlier.

Bank of America set aside $8.2 billion in reserves for credit-card losses, up from $4.3 billion a year earlier. It also set aside $3.4 billion in reserves for its home-loan unit, compared with $1.8 billion in the same period last year.

Fourteen of 18 analysts covering Citigroup rate the stock the equivalent of a “sell” or a “hold,” according to data compiled by Bloomberg.

Citigroup had $4.69 billion of bond trading revenue in the quarter, as it benefited along with Goldman Sachs and JPMorgan Chase & Co. from the failure of Wall Street competitors and the government-led rescue of the financial system. Sales of U.S. corporate bonds surged to $438 billion this year, up more than 50 percent from a year earlier, according to Bloomberg data.

The fixed-income bonanza, along with wider net interest margins and gains from accounting changes, masked declines in credit-card and consumer banking revenue, and soaring costs to cover bad loans at its credit card unit.

For Related News and Information: Citigroup earnings: C US <Equity> TCNI ERN <GO> Bank writedowns, job cuts and bailouts: WDCI <GO> Financial analysis of Citigroup: C US <Equity> FA16 <GO> Company News: C US <Equity> CN <GO> Top Stories: TOP<GO>

Last Updated: April 20, 2009 10:49 EDT