Citigroup’s profit warning

Source: Exec Digital USA

Date :10/1/2007 8:28:52 AM

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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