Citigroup said it expects JPMorgan Chase & Co to post a loss in the third quarter, reflecting its estimates for loan loss provisions and write-downs at the U.S. banking giant.

The brokerage now expects JPMorgan to report a loss of 32 cents a share in the quarter, compared with its earlier estimate of a profit of 23 cents a share.

Citigroup, which rates the stock "hold," said it sees $3.2 billion of reserve build and likely write downs of $3.4 billion for JPMorgan in the third quarter.

The brokerage cut its earnings estimates on the bank to $1.35 from $1.95 a share for 2008. It lowered its 2009 earnings estimate by 25 cents to $2.70 a share to reflect more conservative view on credit and reduced outlook for investment banking.

"We believe the near- to intermediate-term outlook remains challenged in light of higher credit costs in card and the retail bank, as well as the increasing likelihood of sustained lower revenues from JPMorgan's capital markets business," analyst Keith Horowitz wrote in a note to clients.

The analyst retained his target price of $40 on the stock, saying there are also likely to be several positive signs, including increased market share across JPMorgan's key businesses that actually improve its longer-term outlook.

Shares of JPMorgan were down 4 percent at $40.01 Monday afternoon on the New York Stock Exchange.