The U.S. Securities Industry Association estimates that the September 11 attacks will decimate U.S. securities industry profits in the third quarter of 2001.

A new report from the SIA estimates the U.S. industry will lose US$200 million as a result of the terrorist attacks.

It was anticipating profits to slide to between US$1 billion and US$1.4 billion in the quarter, a precipitous drop from the US$2.8 billion earned in the second quarter. “The terrorist attack dramatically reduced industry prospects in the near term,” it notes.

The estimates concentrate on the net operating earnings of the U.S. domestic securities industry and any extraordinary losses and liabilities. While this is a preliminary estimate, the SIA cautions that it is really too early to estimate any extraordinary losses with any reliability. Many of these losses are fully insured however, and the SIA says it expects to see overinflated numbers for the fourth quarter as those payouts are made. It sees a positive year overall, with annual profits coming in at US$8.0 billion, down from US$21.0 billion last year.

The SIA estimates that gross revenues will be down 16% to US$42.5 billion, with expenses only falling 11%. It had estimated revenues at US$43.3 billion before the attack.

The SIA highlights a number of mitigating factors that kept the losses from being worse than they are: effective contingency planning, the quick re-opening of the markets, quick action by government officials, and the fact that investors didn’t panic.