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
Citigroup Profit Plunge Hits a Nervous Market
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)   (Associated Press)

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." (More Citigroup stories.)

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