Citigroup Inc, the largest U.S. bank, said on Monday third-quarter profit fell 57 percent, hurt by losses from subprime and leveraged loans, fixed-income trading and its U.S. consumer business.
Net income fell to $2.38 billion, or 47 cents per share, from $5.51 billion, or $1.10, a year earlier.
Revenue rose 6 percent to $22.66 billion, while operating expenses increased 22 percent to $14.56 billion.
Analysts on average expected profit of 43 cents per share on revenue of $20.81 billion, according to Reuters Estimates.
The quarter marked the latest setback for Chief Executive Charles Prince, who is trying to boost a stock that has risen just 5 percent since he took the helm four years ago.
On Thursday, he overhauled leadership at Citigroup's investment banking unit, and some investors and analysts have called for further changes, including perhaps at the top.
Results included pre-tax writedowns of $1.35 billion for leveraged loans, $1.56 billion for subprime mortgages, and $636 million from fixed income trading.
They also included a $729 million pre-tax gain from the sale of shares in Brazilian credit card processor Redecard SA.
Meanwhile, credit costs increased $2.98 billion, including a $780 million increase in net credit losses and a $2.24 billion charge to increase reserves for bad loans. Return on equity was 7.4 percent.
This was a disappointing quarter, even in the context of the dislocations in the subprime mortgage and credit markets, Prince said in a statement.
New York-based Citigroup had on October 1 projected a 60 percent drop in quarterly earnings.
Other banks have also reported or projected losses from leveraged loans, mortgages, trading or a mix of factors, including Bank of America Corp, Deutsche Bank AG, Merrill Lynch & Co, UBS AG and Washington Mutual Inc.
Citigroup shares closed Friday at $47.87 on the New York Stock Exchange. They have fallen 14 percent this year, while the Philadelphia KBW Bank Index is down 8 percent.
Corporate and investment banking profit sank 74 percent to $446 million, hurt by the subprime and trading exposures.
On Thursday, Citigroup announced the departure of trading chief Thomas Maheras, and elevating Vikram Pandit to oversee investment banking, trading and alternative investments.
Profit in consumer banking, Citigroup's largest business, fell 44 percent to $1.78 billion, including declines of 55 percent in the United States and 15 percent internationally.
Consumer revenue rose 14 percent to $14.68 billion, but was little changed in the United States.
Wealth management profit, including the Smith Barney brokerage and private bank, rose 23 percent to $489 million. Alternative investments generated a $67 million loss, hurt by lower revenue from investments.
Prince this year announced 17,000 job cuts as part of a plan to save $4.58 billion a year by 2009.
Citigroup ended September with $2.35 trillion of assets.
(Reporting by Jonathan Stempel)