Deutsche Bank analyst sees mortgage fallout affecting earnings through end of year; Merrill, Citi to be hit hardest.
LONDON (CNNMoney.com) -- Banks are likely to mark down another $10 billion of mortgage assets in the fourth quarter, according to one analyst's estimates.
Deutsche Bank analyst Michael Mayo said in a note Thursday that banks and brokerages are likely to see their earnings pressured through the rest of 2007.
Merrill Lynch & Co. Inc. (Charts, Fortune 500) and Citibank Inc. (Charts, Fortune 500) are expected to be hit the hardest. Mayo estimated each bank would write down $4 billion in the fourth quarter.
He said Bear Stearns Cos. Inc. (Charts, Fortune 500), Morgan Stanley (Charts, Fortune 500), Bank of America Corp. (Charts, Fortune 500) and Wachovia Corp. (Charts, Fortune 500) are also likely to take markdowns.
Banks have taken massive hits from risky mortgage securities in the third quarter. Merrill Lynch wrote down $7.9 billion, and Citi took a $2.2 billion markdown due to mortgage-backed securities and credit trading losses.
Fears of more writedowns have stoked credit worries and raised investor anxiety. The Dow Jones industrial average plummeted 362 points on Thursday - its fourth-biggest point decline of the year - and kept falling on Friday.
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