This excerpt taken from the C 8-K filed Oct 1, 2007.
CITI EXPECTS SUBSTANTIAL DECLINE IN THIRD QUARTER NET INCOME
New York, NY Citigroup Inc. (NYSE:C) announced today that dislocations in the mortgage-backed securities and credit markets, and deterioration in the consumer credit environment are expected to have an adverse impact on third quarter financial results. Citi currently estimates that it will report a decline in net income in the range of 60% from the prior-year quarter, subject to finalizing third quarter results.
Our expected third quarter results are a clear disappointment. The decline in income was driven primarily by weak performance in fixed income credit market activities, write-downs in leveraged loan commitments, and increases in consumer credit costs, said Charles Prince, Chairman and CEO of Citi.
Our fixed income trading business has a long history of earnings power and success, as shown in this years record first half results. In September, this business performed at more normalized levels and we see this quarters overall poor trading performance as an aberration. While we cannot predict market conditions or other unforeseeable events that may affect our businesses, we expect to return to a normal earnings environment in the fourth quarter, said Prince.
The following accounts for a significant portion of the expected decline in third quarter results: