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Citigroup Profit Plunge Hits a Nervous Market

57% quarterly drop, gloomy outlook drive bank's stock down

By Sam Gale Rosen,  Newser Staff

Posted Oct 15, 2007 12:57 PM CDT
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(Newser) – Citigroup reported a 57% drop in third-quarter profits today, anticipated news that nevertheless sent the bank's shares down by 3.6% to $46.17. The news helped drive nervous market downward as well. "This is the beginning of earnings season, and the market is skittish because analysts are looking for a weak quarter, particularly from the financials," a strategist told the Journal.

In fact, Citigroup performed slightly better than it had predicted in an October 1 profit warning. But things could get worse rather than better, because the trend of late payments on consumer mortgages is expected to continue. Meanwhile, CEO Charles Prince has backed off his comments that he expected a "return to a normal earnings environment in the fourth quarter."

An unidentified woman walks to a Citibank in Coral Gables, Fla., Wednesday, April 11, 2007. Citigroup Inc., the nation's largest financial institution, said Wednesday it will eliminate about 17,000 jobs as part of a companywide restructuring to reduce costs and improve profit. (AP Photo/Alan Diaz)
An unidentified woman walks to a Citibank in Coral Gables, Fla., Wednesday, April 11, 2007. Citigroup Inc., the nation's largest financial institution, said Wednesday it will eliminate about 17,000 jobs...   (Associated Press)
The Citibank logo is shown on a branch office in this April 11, 2007 file photo in New York. Citigroup Inc. said Monday, Oct. 15 its third-quarter profit dropped 57 percent after the biggest U.S. bank took a hit of more than $3 billion in mortgage-backed security losses, leveraged...
The Citibank logo is shown on a branch office in this April 11, 2007 file photo in New York. Citigroup Inc. said Monday, Oct. 15 its third-quarter profit dropped 57 percent after the biggest U.S. bank...   (Associated Press)
Citibank (AP Photo/Shizuo Kambayashi)
Citibank (AP Photo/Shizuo Kambayashi)   (Associated Press)
A pedestrian walks past a Citibank branch in Boston, Monday, April 16, 2007. (AP Photo/Josh Reynolds)
A pedestrian walks past a Citibank branch in Boston, Monday, April 16, 2007. (AP Photo/Josh Reynolds)   (Associated Press)
William Rhodes, a senior vice chairman of Citigroup Inc., attends the Committee of 100 Conference on Friday, April 20, 2007 in New York. (AP Photo/Mark Lennihan)
William Rhodes, a senior vice chairman of Citigroup Inc., attends the Committee of 100 Conference on Friday, April 20, 2007 in New York. (AP Photo/Mark Lennihan)   (Associated Press)
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More on the causes behind the drop
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New York Times

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