Top US banks Citigroup and J.P. Morgan Chase posted sharp declines in profits today, as the sluggish economy and last month's attacks on New York battered revenues at their Wall Street businesses.
Profits that the US's biggest banks make from investing, trading and advising on mergers and new stock offerings fell due to the weak US economy, tumbling share prices, and the September 11th attacks.
Citigroup, the No. 1 US financial services company, said its third-quarter profits after charges fell 9 per cent, after last month's attacks curbed stock trading operations, erased investment gains and made insurance claims balloon.
The firm, which runs banking, brokerage and insurance operations in more than 100 countries, also said it expects to post 15 per cent earnings growth in the fourth quarter.
Citigroup earned $3.18 billion, or 61 cents a share, in the quarter, after an $85 million charge to buy Mexican bank Grupo Financiero Banamex-Accival. That compared with $3.48 billion, or 67 cents a share a year ago, after $45 million in charges.
Excluding charges, Citigroup earned $3.26 billion, or 63 cents a share, in the quarter, compared with $3.53 billion, or 68 cents a share, a year earlier. It said it expected to post 15 percent earnings growth in the fourth quarter.
Closure of the New York Stock Exchange and temporary shuttering of some branches after the attack cut earnings by about $200 million, or 4 cents a share. Citigroup, which owns the Travelers insurance operation, also had $502 million in losses for property, business interruption, workers compensation and life insurance claims from the attacks.
J.P. Morgan Chase, the No. 2 US bank holding company after Citigroup, posted a 68 per cent drop in net profits.
The New York-based bank earned $449 million, or 22 cents a share, in the third quarter, after $587 million in restructuring and merger costs, compared with $1.40 billion, or 69 cents a share, after $21 million in charges, a year ago.
Excluding charges, J.P. Morgan earned $1.04 billion, or 51 cents a share, compared with $1.42 billion, or 70 cents a share, a year earlier.