Citibank Warns Of 60% Drop In Earnings Due To Subprime Meltdown
Citibank is warning investors to expect a 60% drop in earnings due to "dislocations in the mortgage-backed securities and credit markets, and deterioration in the consumer credit environment."
Ouch.
"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," said Charles Prince, Chairman and CEO of Citi.Thankfully, Citi has a plan to fix the problem. Free burritos for college students! Yes! This is foolproof.
Citi Expects Substantial Decline in Third Quarter Net Income (Press Release) [Citi]
(Photo:cmorran123)
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Comments:
@esqdork: 60% of "earnings" as in profits. Very different than revenues. Those wacky bankers love to confuse you.
And I bet they are doing what your cynical self just said and are trying to bury all their other bad decisions under the sub-prime headstone.
And yet the stock is up 3% in trading today. I so don't understand the stock market sometimes. Maybe investors are counting on all those additional cards from Macys customers to bail them out.
@MonkeyMonk: The stock junkies know that a mass lay-off is in the near future - that always seems to make a company's stock go up.
Stocks move based on news relative to expectations. A bad result when people expected worse is positive. In this case, people have been worried about the impact of the sub-prime issue and now it has been quantified -- investors hate uncertainty and now that uncertainty has been removed.
I just paid off my citi card, and will never charge another balance on it so long as I live. Although I'm not completely debt free (damn you college!), I'm close enough so that it feels good to not have huge monthly payments.
Citibank had RECORD earnings for 2006, though.
Record Revenues of $23.8B, up 15%
Net Income from Cont. Ops. of $5.1B, up 3%
EPS from Cont. Ops. of $1.03, up 5%
Return on Common Equity of 17.2%
It would have been difficult to match that, even in a great economy. 2006 was the year that saw those unbelievable bonuses for everybody in finance.
What B.S. There total writeoff isn't even going to cut into the red. They are going to make less profit in 1 quarter to write off their subprime losses. Big frickin deal. Thats like me saying I'm going to save 60% less for 3 months because I have a big car repair bill. I'm still saving... and now my car is fixed.
I think I read this morning somewhere that the stock market is up in anticipation of another Fed rate cut.
I can't wait for my dollar to go further in the toilet!
Was 60% of their revenues really derived from sub-prime mortgage-backed securities? Or are they buring some other problems in their revenue stream and blaming it on the sub-prime meltdown?