S&P: Citigroup unchanged

Standard & Poor's said that the ratings on Citigroup Inc. (AA/stable/A-1+) and its rated subsidiaries will not be affected by the announcement that third-quarter earnings will be down 60% year on year as a result of the recent market turmoil and the markdowns on its securities portfolio and loan commitments.

The impact is more extensive than we expected because it is compounded by substantial additions to reserves for the consumer business, the agency said, adding that it has long pointed out that reserves are thin, which could increase earnings volatility in the future.

It appears that the effect will be largely felt in 2007, the agency noted.

Nevertheless, although performance will be disappointing, this does not indicate a change in the long-term prospects for the bank, the agency said.

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