Feb. 25 (Bloomberg) -- Citigroup Inc., the biggest U.S. bank by assets, may post its second-straight quarterly loss and fall short of profit estimates for the year because of writedowns on home-equity loans and junk-grade corporate loans, Oppenheimer & Co.'s Meredith Whitney said.

Whitney, whose downgrade of Citigroup last year triggered an 8 percent decline in the company's stock price, said the bank may report a loss of $1.6 billion, or 28 cents a share, for the first quarter, compared with a profit of about $5 billion, or $1.01, a year earlier. Her prediction today compares with the 45-cent per- share average gain expected by analysts surveyed by Bloomberg. Goldman Sachs Group Inc. analyst William Tanona said Citigroup may have to take a writedown of as much as $12 billion.

The rate of loan losses is ``grossly underestimated by consensus estimates'' at Citigroup and other U.S. banks, Whitney wrote. ``Core fundamentals are rapidly deteriorating.'' She cut her per-share prediction for 2008 earnings by more than 70 percent to 75 cents. The New York-based company's shares could fall more than 36 percent to less than $16, she wrote.

Citigroup fell 38 cents, or 1.5 percent, to $24.74 at 4:10 p.m. in New York Stock Exchange composite trading. The shares have declined about 16 percent this year.

The lender posted a $9.8 billion loss for the fourth quarter, the widest in its 196-year history, after writing down subprime mortgage-linked collateralized debt obligations. The value of those securities plummeted last year as investors shunned debt linked to the least creditworthy borrowers. Vikram Pandit stepped in as chief executive officer in December, after Charles O. ``Chuck'' Prince was forced to resign.

Dividend Prediction

Whitney, 38, was among the first analysts to gauge the depth of Citigroup's losses, writing in a note last October that the bank may have to cut dividend payments to shareholders for the first time since the 1990s. In January, the bank slashed its dividend by 41 percent, reversing a pledge made by its executive- committee chairman, former U.S. Treasury Secretary Robert Rubin, to preserve the shareholder payout.

Citigroup may have additional writedowns this quarter on CDOs, along with losses on more than $43 billion of junk or ``leveraged'' loans, Whitney said. The bank may also face charges on more than $50 billion of residential mortgages granted to customers who borrowed in excess of 90 percent of the value of their homes, Whitney wrote. Credit-card loans also are prone to higher defaults.

Asset Sales

Citigroup may have to sell $100 billion of assets to free up capital, Whitney said. The lender will ``likely be forced to sell what it can and not what it should,'' she wrote.

The bank may write down as much as $12 billion from the value of fixed-income assets in the first quarter, cutting earnings per share 63 percent to 15 cents from a prior estimate of 40 cents, Goldman analyst Tanona wrote in a report dated today.

Tanona also reduced profit estimates for Merrill Lynch & Co., Lehman Brothers Holdings Inc., Morgan Stanley, Bear Stearns Cos., and JPMorgan Chase & Co., as bonds and loans they own lose value.

He cut first-quarter earnings per share estimates by 75 percent for Bear Stearns, 73 percent for Lehman Brothers, 24 percent for Morgan Stanley and 27 percent for JPMorgan Chase. All the firms are based in New York.

In a separate report, Whitney and colleague Kaimon Chung also cut their earnings estimates on large U.S. East Coast banks by an average of 29 percent for 2008 and 13 percent for 2009.