Citigroup Inc said yesterday that its third-quarter profit dropped 57 percent after the biggest US bank took a hit of more than US$3 billion in mortgage-backed security losses, leveraged debt write-downs and fixed-income trading losses.
Citigroup, which also boosted loan-loss provisions by US$2.24 billion, said net income fell to US$2.38 billion, or US$0.47 per share, in the July to last month period. That's down from US$5.51 billion, or US$1.10 a share, in the same period a year earlier.
Revenue in the quarter rose 6 percent to US$22.66 billion from US$21.42 billion a year earlier.
The results included a US$729 million pretax gain due to the sale of shares of Redecard SA, a company that signs up merchants in Brazil for Mastercard Inc.
The results were slightly better than Citigroup had recently estimated. On Oct. 1, the company had warned that its third-quarter profit would fall by about 60 percent.
Citigroup's shares rose in pre-market trading, after closing at US$47.87 on Friday. It has fallen more than 6 percent since the start of July, and is down more than 12 percent year-to-date.
"This was a disappointing quarter, even in the context of the dislocations in the subprime mortgage and credit markets," chairman Charles Prince said in a statement. "A significant amount of our income decline was in our fixed income business, where we have a long track record of strong earnings, and this quarter's performance was well below our expectations."
RECALLS HURT MATTEL
Meanwhile, toy maker Mattel Inc yesterday reported a 1 percent drop in fiscal third-quarter profit, due to charges related to multiple product recalls.
Net income for the quarter slipped to US$236.8 million, or US$0.61 per share, from US$239 million, or US$0.62 per share, in the year-ago period. Latest-quarter results included charges of about US$40 million related to product recalls covering lead-tainted merchandise imported from China.
Sales rose 3 percent to US$1.84 billion from US$1.79 billion a year ago, mainly helped by the weaker US dollar.
Analysts surveyed by Thomson Financial had expected profit of US$0.70 per share on revenue of US$1.91 billion.
Since August, Mattel has announced three separate recalls of some 21 million toys because of dangers to children from lead paint or from tiny magnets.
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