SAVE | EMAIL | PRINT | MOST POPULAR | 
RSS | REPRINTS
Loan Write-Downs, Credit Market Drag Citigroup Income Down
Published: October 01, 2007
Source: The Financial Times
New York -- Citigroup said Monday that third quarter net income would likely drop by 60 percent due to the recent credit crisis, the Financial Times reports.
”Our expected third-quarter results are a clear disappointment," Citigroup Chairman and Chief Executive Chuck Prince said in a statement. "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.”
Last week Prince released an audio statement on the Citigroup Web site saying that Citigroup “[is] one of the largest providers of leveraged financing to clients around the world. When the leveraged loan market severely dislocated this summer, it had a significant impact on us, resulting in large write-downs.”
The group said it would have write-downs of about $1.4 billion before tax on funded and unfunded highly leveraged finance commitments, totaling $69 billion at the end of the second quarter, and $57 billion by the end of the third quarter.
Citigroup showed about $1.3 billion in losses before tax on subprime mortgage-backed securities stockpiled for future collateralized debt obligation securitization and further subprime positions.
However, Citigroup's equity underwriting, advisory and transaction service revenues grew extensively. Consumer business customer volumes also grew.
