Citigroup warned investors Monday that the tumult seen credit markets earlier this year would cost $5.9 billion during the third quarter.

The bank estimated it would report a net income decline of about 60 percent from the same reporting period in 2006.

"Our expected third quarter results are a clear disappointment. The decline in income was driven primarily by weak performance in fixed income credit market activities, write-downs in leveraged loan commitments, and increases in consumer credit costs," Charles Prince, Citi chairman and CEO, said in a statement.

Prince said he expects the poor third-quarter report to be an aberration.

"While we cannot predict market conditions or other unforeseeable events that may affect our businesses, we expect to return to a normal earnings environment in the fourth quarter," he said.

Among the reasons Citigroup listed for the revision downward were write-downs of approximately $1.4 billion in loan values, losses of roughly $1.3 billion in securities backed by subprime mortgages and another $600 million in its credit trading operation. On its consumer business side, Citi said it expects to pay $2.6 billion to cover credit losses and reserve against future loan losses // Copyright 2007 by United Press International


Publication date: 01 October 2007   

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