NEW YORK (CNN/Money) - Wall Street firms are no longer on track to post record industry-wide profits this year, but results should be good enough to have the second-most profitable year after the 2000 windfall, according to a trade group forecast.
The Securities Industry Association (SIA) reported Wednesday that a sharp and unexpected drop in third-quarter earnings in the industry had caused it to lower its estimate of industry-wide profits to more than $16.3 billion, down from the group's previous target of $22.45 billion it forecast a month ago.
In 2000, the year the last bull market ended, the industry posted record earnings of $21 billion, according to the SIA. Industry-wide earnings of $16.3 billion in 1999 currently marks the second-best year in terms of profits.
The association said that an overall decline in trading profits at NYSE-member firms caused cumulative third-quarter pre-tax profits to fall to $3 billion, down 45 percent from the second quarter's $5.4 billion. The drop in trading gains came primarily from lower debt trading gains compared to second-quarter results. The earnings drop in the period came despite a sharp reduction in costs due to the lower interest rates.
Still, even with the lower third-quarter earnings, profits for the first nine months of the year of nearly $12 billion are more than double the earnings in the same period of 2002 and better than all but three full-year results.
The association said mutual-fund sales revenue and asset-management fees showed improved results, while revenue from underwriting activity and brokerage commissions declined in the quarter.
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