Top US banks to lose $26m through mortgage exposure, analysts claim

4 November 2010

Four of the largest banks in the US could lose up to $26 million during the next four years due to their exposure to private-label mortgages, a new report has predicted.

According to analysts at Goldman Sachs, potential losses for the likes of Bank of America, JPMorgan, Citigroup and Wells Fargo & Co could also be incurred from delinquency.

Private-label mortgages are offered by private firms as opposed to those products provided by the government or government-backed organisations.

Up to $28 billion was removed from the valuation of the four banks by analysts as possible future losses were factored into the forecast.

Price targets for BofA, Wells Fargo and PNC Financial were cut while they were raised for JPMorgan and Citigroup.

Goldman Sachs recently reported its earnings for the third quarter of 2010, with profits falling by 40 per cent when compared with results from the same period last year.

Statistics from the bank showed it recorded a net income of $1.9 billion or $2.98 per share between July and September, a figure which was lower than the $3.19 billion or $5.25 per share seen in the same three months the previous year.

By Jim Ottewill

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