Washington Mutual, Inc. (NYSE:WM) announced today that a weakening housing market and disruptions in the secondary market through the end of the third quarter will result in a decline in net income of approximately 75 percent from the prior year quarter. The Seattle-based bank said that it expects write-down $150 million in held-for-sale mortgage loans, as well as absorbing $110 million on MBS holdings. WaMu also expects to take a net loss of $150 million in the company's trading securities portfolio, and will increase loan loss reserves to $975 million -- reflecting what it said in a statement was "ongoing weakness in the housing market, primarily as it affects subprime and home equity loans." From the press statement:
WaMu Chairman and CEO Kerry Killinger said, “While we're disappointed with our anticipated third-quarter results, we look forward to an improved fourth quarter as we continue to see good operating performance in our Retail Banking, Card Services and Commercial Group businesses.� Killinger added that the company continues to have the liquidity and capital necessary to grow the company's businesses and support its current dividend, as it continues to execute its long-term strategic plans.
Only a few days back, Citigroup also said it was expecting losses in the third quarter, warning that profit at the nation's largest bank could fall as much as 60 percent.