Washington Mutual Inc. announced plans to cut 2,900 jobs Tuesday as it lowered its annual earnings projections for 2003 and broadened its projections for 2004, because it is making less money as its mortgage business slows. Shares of WaMu fell more than 8 per cent on the news.

"Washington Mutual benefited from extraordinary mortgage volumes over the past few years, which allowed us to fund the expansion of a national retail banking franchise and multi-family lending business while producing solid earnings growth," said Kerry Killinger, chairman, president and chief executive officer. "Now that the mortgage market has clearly slowed, we are adjusting our business to adapt to the new realities of the current environment."

Demand for mortgages has slowed as interest rates have crept up from 40-year lows hit this summer, which sent consumers to lenders in droves to refinance at the lower rates.

The company said its mortgage volume in the fourth quarter is projected to decrease by approximately 50 per cent from third quarter levels and that pricing pressures also would erode profits from that part of its business.

Washington Mutual said earnings per share for 2003 would range between $4.15 and $4.25. Previously, the company had projected earnings at $4.43 per share. In 2002, the company reported earnings of $4.02 per share.

The company also widened its 2004 earnings projections on the lower end. The nation's largest thrift now expects earnings next year to range from $4.30 to $4.80 per share, compared with a previous range of $4.70 to $4.80 per share.

The company has accelerated previously planned efforts to reduce expenses. From August through November, the company eliminated the equivalent of 4,500 full-time positions in its home lending support operations. Many of those reductions were non-employee temporary and contract personnel and decreased overtime.

Washington Mutual has targeted 2,000 positions in the home lending area and 900 positions in other areas to be eliminated in the first quarter of 2004, spokesman Alan Gulick said.

The job cuts represent nearly 6 per cent of the Seattle-based company's 52,500 member work force.

Shares of Washington Mutual fell $3.88 to close at $39.97 on the New York Stock Exchange.

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