Monday, 8 October 2007

WaMu 3Q07 provision to reach $975m

Still catching up on last week's action. About a month ago I highlighted Washington Mutuals new look earnings and credit provision profile. With their announcement on Friday that credit provisions will reach $975 million in 3Q07 it may look even worse.

WM also stated that 3Q07 earnings will drop some 75%. That implies 3Q07 Net income of approximately $187m. Last month I estimated WM 2H07 Net income of around $600m, thus 4Q07 would have to be around $413m. On 4Q07 WM CEO Kerry Killinger had this to say:

"While we're disappointed with our anticipated third-quarter results, we look forward to an improved fourth quarter,"

Doesn't give you much to go on except to say that they expect it to be better than awful. No doubt it won't show earnings growth from the year ago period given the extent of credit losses expected. As noted in the previous post this is one company that is set to post quarter on quarter and year on year earnings declines.