The bank also announced its costs are increasing due to the slowdown in the US economy - credit costs rose $4.1 billion in the quarter, due to rising delinquencies on mortgages, credit cards and other loans.
The bank also announced $12.5 billion in new investment, led by $6.88 billion from the Singapore Investment Corporation, with contributions from other private investors and sovereign wealth funds. This should allow the bank to maintain a tier-one capital ratio of 8.2%, Citigroup said.
But S&P warned that the worst might not be over for the bank. New York-based analyst Tanya Azarchs wrote: "Our downgrade also takes into consideration that Citigroup's performance could be rocky in 2008 amid prospects for a continued difficult operating environment for US banks. More writedowns of mortgage-related securities cannot be ruled out".