Washington Mutual Profit Hit by Mortgage Losses

Washington Mutual

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[WM  Loading...      ()   ] said third-quarter profit fell by 72 percent due to mounting losses and write-downs related to mortgages.

WaMu, the nation's largest savings bank, said net income fell to $210 million, or 23 cents per share, from $748 million, or 77 cents per share, a year earlier.

Analysts surveyed by Thomson Financial expected earnings of 27 cents a share on revenue of $3.53 billion.

WaMu also announced a quarterly dividend of 56 cents a share.

"We're disappointed with our third quarter results but they reflect the increasingly difficult market conditions that are challenging the banking industry," said CEO Kerry Killinger, in a prepared statement.

Killinger also said he sees no end to the U.S. housing slump and that WaMu expects nonperforming assets and charge-offs to increase in the fourth quarter.

"We were going through an orderly correction in the housing market until the middle of the year, when there was a significant falloff," 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."

Killinger expects the thrift to set aside larger amounts for bad loans than amounts it writes off for the foreseeable future.

Earlier this month, Washington Mutual said the weak housing market and the recent mortgage crunch will lead to a 75 percent drop in its third-quarter net income, making it the latest financial institution to warn investors it took a major hit over the summer.