NEW YORK (Reuters) - E*Trade Financial Corp , the U.S. discount brokerage hardest hit by the mortgage market meltdown, reported a steep loss from continuing operations in the third quarter as it boosted by nearly $200 million the amount set aside to cover 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)
