Washington Mutual sees 3rd-qtr profit down 75 pct

Loan loss provisions for the third quarter will be about $975 million, the largest U.S. savings and loan said in a statement. It expects total losses and write-downs of about $410 million.

Only days ago, Citigroup Inc, the largest U.S. bank by market value, said it was expecting a 60 percent fall in third-quarter earnings on $5.9 billion in losses and write-downs from subprime and leveraged loans, fixed income trading, and weakness in its consumer business.

Merrill Lynch, the largest U.S. brokerage, said on Friday it would post a third-quarter loss after writing down $4.5 billion in collateralized debt obligations and subprime mortgage holdings.

"We're disappointed with our anticipated third-quarter results," WaMu Chief Executive Kerry Killinger said in a statement. But he added the company expects an improved fourth quarter on good performance in its retail banking, card services and commercial group businesses.

Killinger said the bank, which announced 1,000 layoffs last month, has the liquidity and capital necessary to develop its businesses and support its current dividend.

Washington Mutual earned $812 million before exceptional items in the previous year's quarter. A 75 percent drop in the latest quarter's profit would see that figure plunge to $203 million, or less than half the $425 million forecast by analysts surveyed by Reuters Estimates.

Analysts said they were not surprised by WaMu's news.

Punk Ziegel & Co analyst Richard Bove said he assumed the thrift would take a $700 million loan provision each in the third and fourth quarters, a little lower than WaMu's $975 million.

"The trend seems to be that the banks are taking the big bath and trying to get everything out of the way," said Keith Davis of Farr, Miller & Washington, an investment management firm.