| Countrywide posts $1.2b loss in third quarter |
NEW YORK Countrywide Financial Corp., the largest US mortgage lender, posted a $1.2 billion third-quarter loss on Friday, hurt by write-downs as the US housing market deteriorated.
But the lender also said the quarterly loss, its first in 25 years, represents an “earnings trough.” It projected fourth-quarter profit of 25 cents to 75 cents per share, and expects to be profitable in 2008. It also said it has negotiated $18 billion of “highly reliable” new liquidity.
Shares of Countrywide rose $1.73, or 13.2 per cent, to $14.80 in pre-market electronic trading.
The quarterly net loss totalled $2.85 per share. That compared with a profit of $647.6 million, or $1.03, a year earlier.
Analysts on average expected a loss of $1.65 per share, according to Reuters Estimates. Results reflected “unprecedented disruptions in the US mortgage market and the global capital markets, as well as continued weakening in the housing market,” Chief Executive Angelo Mozilo said in a statement. “We also laid the foundation for a return to profitability in the fourth quarter.”
Chief Operating Officer David Sambol attributed the loss to write-downs of holdings after capital markets tightened, higher credit losses, and restructuring charges stemming from cost cutting, including the elimination of 10,000 to 12,000 jobs.
Calabasas, California-based Countrywide joins many other financial companies to report write-downs for subprime and other mortgages, including Citigroup Inc., Merrill Lynch & Co. and Washington Mutual Inc.
Countrywide shares closed Thursday at $13.07. Through Thursday, they had fallen 69 per cent this year. They had also fallen 40 per cent since Bank of America Corp. on August 22 injected $2 billion to shore up its finances.
Reuters
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