E*Trade reports loss, expects higher loan losses

The company, which in January said it expected to turn a profit this year, now says it does not expect a profit in the fourth quarter, and will wait until the end of the year before discussing the outlook for 2009, "given how uncertain the future economic environment is."

E*Trade said it expects home equity losses in the 2008 to 2010 period of about $1.8 billion, up 20 percent from its prior forecast.

"This represents an unusual quarter in which we took a higher view of losses in the future," Donald Layton, E*Trade's chief executive, said in an interview. "Some people would say we're getting the problem behind (us)."

Layton said E*Trade was "very interested" in the U.S. government's $250 billion Capital Purchase Program, for which the company believes it is eligible.

E*Trade lost $50.5 million, or 9 cents a share, in the period ended September 30, compared to a loss of $58.4 million, or 14 cents a share, in the same period a year earlier.

Excluding one-off items, the loss was 60 cents a share. On average, analysts polled by Reuters Estimates expected E*Trade to report a loss of 35 cents a share.

Revenue in the period was down 21 percent at $378 million.

The company's $518 million loan loss provision is up from $319 million in the previous quarter and nearly triple the year-earlier level. It said it expects to set aside lower amounts in coming quarters, and that it would begin to write off fewer loans next year.

(Reporting by Jonathan Spicer)