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Washington Mutual's Earnings Rise 5%

October 22, 2003|From Bloomberg News

Washington Mutual Inc., the biggest U.S. savings and loan, said Tuesday that third-quarter profit rose 5% as more consumers borrowed money to finance homes.

The Seattle-based company said net income in the quarter was $1.03 billion, or $1.12 a share, up from $981 million, or $1.02, a year earlier.

Net interest income, which the company earns from making loans, rose to $1.95 billion from $1.92 billion a year earlier. Income from fees and service charges rose 20% to $1.65 billion.

Chief Executive Kerry Killinger is adding branches in New York and Chicago to boost growth after spending more than $30 billion on acquisitions since 1991. He wants to expand consumer lending and deposit-taking to help counter a slowing demand for mortgages as benchmark interest rates rise from the 40-year lows reached in June.

"Washington Mutual still has a lot of geographic expansion opportunities," said William Nygren, who helps manage $38 billion at Chicago-based Harris Associates, Washington Mutual's second-biggest shareholder. "The challenge is to continue to weather the ups and downs of the mortgage cycle."

Washington Mutual was the second-worst-performing bank stock in the Standard & Poor's 500 in the third quarter. The shares dropped after the company said Sept. 9 that home loan applications had fallen from July levels as interest rates rose.

Shares of Washington Mutual fell 41 cents Tuesday to close at $40.47 on the New York Stock Exchange.

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