[NYTr] Booming Economy: Citigroup warns quarterly profit to fall 60%

[All the News That Doesn't Fit]

AFP - Oct 1, 2007
http://www.afp.com/english/news/stories/071001151613.06y0a4qp.html

US banking group Citigroup warns quarterly profit to fall 60 percent

NEW YORK (AFP) - Citigroup Inc. -- America's largest banking group --
warned Monday that it foresees a sharp fall of around 60 percent in
third quarter profit due in part to failed mortgage investments.

Citigroup said its quarterly net profit would be much lower than the
same period a year earlier because of losses tied to mortgage-backed
securities and also due to a slowdown in big corporate mergers and
acquisitions.

The banking giant's chairman and chief executive officer, Charles
Prince, described the expected profit decline as a "clear
disappointment," but voiced optimism that earnings growth would improve
in future months.

Citigroup said rising costs in its consumer business and some trading
losses would also drag down its quarterly profit which it is due to
post on October 15.

"We see this quarter's overall poor trading performance as an
aberration," Prince said.

"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," the Citigroup chief said.

Citigroup's share price was up a slight three cents at 46.70 dollars in
morning trading amid wider stock market gains.

The major bank is not the only finance house suffering from soured
mortgage-backed securities bets. Other banks have also endured heavy
losses from such securities this year.

Citigroup had already disclosed mounting losses from mortgage-backed
securities, which have been ravaged by the downturn in the US housing
market, during the second quarter.

The financial colossus said in late July that rising net credit losses
in the United States totalled 183 million dollars during the second
quarter which it largely attributed to "higher delinquencies in second
mortgages in consumer lending."

Citigroup's market worth of around 232 billion dollars, as well as its
large overseas footprint, however, offers it better protection --
compared with smaller rivals -- from the distressed US mortgage market.