WaMu profit sinks 72 pct, sees more housing slump
NEW YORK (Reuters) - Washington Mutual Inc (WM.N), the largest U.S. savings and loan, said on Wednesday third- quarter profit fell 72 percent, hurt by mounting mortgage losses, and said it sees no end to the U.S. housing slump.
The thrift, which is also one of the nation's biggest home loan providers, nearly doubled its forecast for full-year credit losses, after setting aside $967 million in the third quarter.
Housing difficulties helped push profit down 18 percent at the thrift's 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.
"We were going through an orderly correction in the housing market until the middle of the year, when there was a significant falloff," Chief Executive Kerry Killinger said in an interview. "That 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," he added. "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 for Seattle-based WaMu, as the thrift calls itself, fell to $210 million, or 23 cents per share, from $748 million, or 77 cents, a year earlier.
Analysts on average expected profit of 21 cents per share, according to Reuters Estimates.
WaMu had on October 5 projected a 75 percent decline in profit, and that 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, and the year's fourth increase.
Several other lenders have also announced or projected large write-downs stemming from the quarter's credit market turmoil, including Citigroup Inc (C.N) and Merrill Lynch & Co
MER.N.
Sovereign Bancorp Inc SOV.N, the nation's second-largest thrift, posted a 68 percent decline in quarterly profit on Wednesday as credit losses mounted.
WaMu shares closed down 13 cents at $33.07 on the New York Stock Exchange. The shares fell to $32.65 after hours. WaMu announced results after U.S. markets closed.
CARD IMPACT
Operating profit in retail banking fell 18 percent $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 percent from 2.53 percent.
Credit card profit fell 51 percent 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 percent to $54 million, reflecting pressure from capital markets.
WaMu operates about 2,212 branches and ended September with $330.1 billion of assets.
Through the close, WaMu shares were down 27 percent this year, compared with declines of 12 percent in the Philadelphia KBW Bank Index .BKX and 28 percent in the KBW Mortgage Finance Index .MFX.
