Citigroup said on Monday it expects to report a decline of about 60 percent in third-quarter net income.
The largest U.S. bank by market value stunned investors with a warning that turmoil in the mortgage markets will wipe as much as $3.3 billion off its third quarter profits.
The group said that the meltdown in sub-prime mortgages combined with a deteriorating environment for consumer credit will result in the profit decline.
Clear disappointment
CEO Charles Prince called the result "a clear disappointment."
He said in a statement the decline had been driven "by weak performance in fixed-income credit market activities, write-downs in leveraged loan commitments, and increases in consumer credit costs."
This time last year, Citigroup generated net income of $5.5 billion, suggesting this quarter's figure will be as low as $2.2 billion.
The profits warning at Citigroup comes as UBS, the world's biggest money manager, unveiled a $3.4 billion write-down as a result of losses at its hedge fund and exposure to sub-prime.
Third quarter losses at UBS are expected to total as much as 800 million Swiss francs.
October 1 2007
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