Submitted by Naomi M on Mon, 10/22/2007 - 16:57.
Washington Mutual takes a gut-wrenching $348-million loss on its home loans
Q3 profits for Washington Mutual Inc., the largest U.S. savings and loan, plummeted 72%, hurt by mounting mortgage losses, largely due to the housing slump, according to the LA Times.
Housing difficulties helped push profit down 18% at its retail banking unit and cause a $348-million loss in its home loans unit, compared with a $23-million loss a year earlier. Earnings fell in all four of the thrift's units.
WAMU experienced a significant falloff mid-2007 and it has continued in the fourth quarter, accelerated by the lack of liquidity in the capital markets.
"We are not making projections as to when the market will stabilize," said Chief Executive Kerry Killinger. "At this point, we have not seen signs of stabilization. We are planning for challenging conditions in the housing market to continue for some time."
Net income fell to $210 million, or 23 cents a share, from $748 million, or 77 cents, a year earlier. Analysts on average expected profit of 21 cents a share, according to Reuters Estimates.
WAMU projected a 75% decline in profit on October 5th and said it would set aside $975 million for loan losses. It had set aside $372 million in the second quarter. The thrift plans to set aside $2.7 billion to $2.9 billion this year for credit losses, up from the $1.5 billion to $1.7 billion it forecast in July.
WAMU shares fell 13 cents to $33.07, then dropped to $32.65 in after-hours trading. The bank's results were released after U.S. markets closed.
Operating profit in retail banking fell 18% to $453 million as rising home loan and home-equity losses offset the benefit from 310,000 net new checking accounts. Net interest margin rose to 2.86% from 2.53%.
Credit card profit fell 51% to $102 million, hurt by rising delinquencies, although WaMu opened a record 945,000 new credit card accounts.
"I'd characterize the card performance as very solid, in line with expectations," Killinger said. "There is a gradual increase in delinquencies as the unemployment rate has gone up some, and we've seen some modest residual effect of the declining housing market impacting customers with cards."
Commercial banking profit fell 31% to $54 million, reflecting pressure from capital markets.
Several other lenders also have announced or projected large write-downs stemming from the quarter's credit market turmoil, including Citigroup Inc. and Merrill Lynch & Co.
Sovereign Bancorp Inc., the nation's second-largest thrift, posted a 68% decline in quarterly profit Wednesday as credit losses mounted.
Source: http://www.latimes.com/business/investing/ la-fi-wamu18oct18,1,6972368.story?coll=la-headlines- business-invest&ctrack=1&cset=true
Housing difficulties helped push profit down 18% at its retail banking unit and cause a $348-million loss in its home loans unit, compared with a $23-million loss a year earlier. Earnings fell in all four of the thrift's units.
WAMU experienced a significant falloff mid-2007 and it has continued in the fourth quarter, accelerated by the lack of liquidity in the capital markets.
"We are not making projections as to when the market will stabilize," said Chief Executive Kerry Killinger. "At this point, we have not seen signs of stabilization. We are planning for challenging conditions in the housing market to continue for some time."
Net income fell to $210 million, or 23 cents a share, from $748 million, or 77 cents, a year earlier. Analysts on average expected profit of 21 cents a share, according to Reuters Estimates.
WAMU projected a 75% decline in profit on October 5th and said it would set aside $975 million for loan losses. It had set aside $372 million in the second quarter. The thrift plans to set aside $2.7 billion to $2.9 billion this year for credit losses, up from the $1.5 billion to $1.7 billion it forecast in July.
WAMU shares fell 13 cents to $33.07, then dropped to $32.65 in after-hours trading. The bank's results were released after U.S. markets closed.
Operating profit in retail banking fell 18% to $453 million as rising home loan and home-equity losses offset the benefit from 310,000 net new checking accounts. Net interest margin rose to 2.86% from 2.53%.
Credit card profit fell 51% to $102 million, hurt by rising delinquencies, although WaMu opened a record 945,000 new credit card accounts.
"I'd characterize the card performance as very solid, in line with expectations," Killinger said. "There is a gradual increase in delinquencies as the unemployment rate has gone up some, and we've seen some modest residual effect of the declining housing market impacting customers with cards."
Commercial banking profit fell 31% to $54 million, reflecting pressure from capital markets.
Several other lenders also have announced or projected large write-downs stemming from the quarter's credit market turmoil, including Citigroup Inc. and Merrill Lynch & Co.
Sovereign Bancorp Inc., the nation's second-largest thrift, posted a 68% decline in quarterly profit Wednesday as credit losses mounted.
Source: http://www.latimes.com/business/investing/ la-fi-wamu18oct18,1,6972368.story?coll=la-headlines- business-invest&ctrack=1&cset=true
1
Commercial Property Purchase for your business operation - buy with just 10% down payment
