Citigroup Inc posted a quarterly per-share loss as it suffered $8 billion of credit losses, raising questions about when the bank can return to sustained profitability.

The loss per share was narrower than analysts expected but still underlined how far the third-largest U.S. bank has to go to catch up with stronger rivals like JPMorgan Chase & Co. Citigroup shares were down 5 percent in midday trade.

On first blush, this is not particularly optimistic, said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, New York. They did beat on earnings and revenue, but the $8 billion credit losses ... is a reminder that we are in a weak economic environment.

The bank did post net income of $101 million, but it reported a $529 million loss from continuing operations before taxes. The ultimate bottom line for shareholders was negative, including one-time losses from converting preferred shares into common stock, and gains from taxes.

Results at the bank, which has been bailed out three times by the U.S. government, including $45 billion of capital from the Troubled Asset Relief Program, were further muddied by accounting losses that resulted from the bank's bonds performing better.

It can give you brain damage trying to figure this out, said Walter Todd, portfolio manager at Greenwood Capital Management in Greenwood, South Carolina. With all the other opportunities out there in the financial space, I don't know why you'd spend the time to try to understand what the heck's going on here, unless you can take a lot of risk.

Analysts have struggled to nail down when Citigroup will start posting profits from its main businesses. Some have forecast a return to core profitability as soon as early next year.

The third quarter was helped by gains of $1.5 billion on appreciation in assets, Collins Stewart analyst William Tanona noted in a research note.

While these earnings are accretive to book value and further reinforce (Citigroup's) capital position, which are positives, we do not view these as high-quality earnings generators, wrote Tanona, who has a hold rating on the stock.

Citigroup has posted more than $100 billion of writedowns and consumer credit losses since the credit crisis began. It posted more than $37 billion of net losses between the fourth quarter of 2007 and the fourth quarter of 2008.

Citigroup CEO Vikram Pandit, whose relationship with regulators has been described as sometimes contentious, said in a conference call that consumer credit remained the number one issue affecting the company's results.

In the third quarter, the bank posted a net loss to shareholders of $3.2 billion, or 27 cents a share, compared with a loss of $2.9 billion, or 61 cents a share, in the third quarter last year.

Analysts' average forecast was a loss to shareholders of 38 cents a share.

BETTER BY OTHER MEASURES

The bank reported net income of $101 million, which excludes preferred stock dividends and a $3.1 billion item linked to Citigroup's converting preferred shares into common stock. That figure compares with a loss of $2.8 billion in the same quarter last year.

The bank said revenue in its securities and banking unit dropped by about a third, to $4.89 billion. Excluding the impact of an accounting loss from improved credit spreads, the unit's revenue was $6.6 billion.

Major competitors including JPMorgan Chase & Co and Goldman Sachs Group Inc posted big increases in investment banking revenue, driven in large part by fixed-income trading.

On a conference call with reporters, Chief Financial Officer John Gerspach said the bank had moved many of its suffering fixed income assets to a different unit. With those assets improving dramatically in the third quarter, the bank's bottom line was bolstered, but the results did not show up in the commercial and investment bank's results.

Net revenue at Citigroup, which is now about one-third owned by taxpayers, rose 25 percent from a year earlier to $20.39 billion.

Total assets rose 2 percent from the second quarter, to $1.89 trillion.

Pandit has struggled to fix a bank formed through decades of acquisitions that resulted in a hodgepodge of fiefdoms. He has tried to shed bad assets and focus on Citigroup's main businesses, including international commercial and investment banking.

In a conference call, Citigroup Chief Financial Officer John Gerspach declined to comment on a possible timetable for repaying TARP funds. But he insisted the bank had the capacity to begin to repay TARP and that it was just a question of when.

Citigroup shares are down roughly 30 percent this year, compared with a rise of about 10 percent rise in the KBW Bank index .BKX> and a nearly 50 percent advance by shares of Citigroup rival JPMorgan Chase & Co.

Citigroup earlier this year separated the businesses it wanted to keep, which it calls Citicorp, from the units and assets it aims to shed, which it calls Citi Holdings.

(Reporting by Dan Wilchins; editing by John Wallace)

New York Vikram pandit Investment Citigroup