NEW YORK Citigroup Inc (C.N), the largest U.S. bank, may need to write down $12 billion of debt and boost reserves for bad loans by $1 billion as the global credit crunch deepens, a Sanford C. Bernstein & Co analyst said.
Bank of America Corp (BAC.N) and JPMorgan Chase & Co (JPM.N), the second- and third-largest banks, may have respective fourth-quarter write-downs of $5.5 billion and $1 billion, analyst Howard Mason also wrote in a December 31 report.
"We are trimming our estimates for the fourth quarter of 2007 and 2008 to account for capital markets write-downs, loan loss reserve building, slower net interest margin re-normalization in 2008 and reduced buyback activity," Mason wrote.
The analyst also halved his forecast for a fourth-quarter write-down at Wachovia Corp WB.N, the fourth-largest bank, to about $1.5 billion from $3 billion.
Financial companies have already announced more than $70 billion of write-downs tied to the global credit crisis.
Last week, Goldman Sachs & Co analyst William Tanona projected fourth-quarter write-downs of $18.7 billion at Citigroup and $3.4 billion at JPMorgan.
Mason now expects a fourth-quarter loss of 65 cents per share at Citigroup, and quarterly profit per share of 40 cents at Bank of America, $1.00 at JPMorgan and 30 cents at Wachovia. He had previously forecast a break-even quarter for Wachovia.
The analyst rates Citigroup and Wachovia "outperform," and Bank of America and JPMorgan "market perform."
Analysts on average expect a quarterly loss per share of 61 cents at Citigroup, and profit per share of 23 cents at Bank of America, $1.01 at JPMorgan and 36 cents at Wachovia, according to Reuters Estimates.
(Reporting by Jonathan Stempel; Editing by Maureen Bavdek)