Two Major Banks Post Huge Gains
Chase Manhattan Corp. posted a 45% gain in its second-quarter earnings Monday, and J. P. Morgan & Co., another of the nation’s largest banking companies, reported a 51% increase, compared to a year ago.
The companies attributed the increases in part to higher net interest income as their costs of obtaining funds in the money markets fell at a more rapid rate than their income from loans and investments.
But George Salem, a banking industry analyst at the investment firm Donaldson, Lufkin & Jenrette Securities, said the biggest gains came in foreign exchange and bond trading, which also benefited from lower interest rates. He also noted thatbanking results were weak in the second quarter last year.
In the meantime, Continental Illinois Corp. reported a second-quarter profit of $37.3 million and a first-half profit of $76.6 million. The company said comparisons with its results a year ago are not meaningful because of the financial restructuring at the banking company last September.
The old Continental Illinois reported a loss of $1.16 billion in the second quarter a year ago but survived with help from an elaborate plan arranged by the federal government.
Chase, which ranks third among the nation’s bank holding companies, reported net income of $131 million for the three months ended June 30, compared to $90 million a year earlier.
Chase operates the nation’s third-largest bank, Chase Manhattan Bank in New York.
Its net interest income rose 24% to $722 million for the quarter, and its fee and commission income rose 27% to $219 million for the quarter.
But foreign exchange trading income rose to $43 million in the quarter from $15 million, and gains on securities transactions rose to $29 million from $2 million.
Chase’s assets amounted to $86.3 billion on June 30, down from $87.6 billion a year earlier.
Morgan, the nation’s fifth-largest banking company, reported second-quarter net income of $157.4 million, compared to $103.7 million a year earlier.
Its principal subsidiary is Morgan Guaranty Trust of New York, the fifth-largest bank in the United States.
Net interest earnings rose 17.2% to $421.2 million in the quarter from $359.5 million, while non-interest earnings income rose 81% to $226.5 million from $125.1 million.
Foreign exchange trading income jumped to $45.6 million in the quarter from a loss of $12.9 million a year ago. Other trading income rose to $31.5 million from $3.5 million in the second quarter of 1984. Net investment securities gains rose to $24.5 million from a net loss of $1.8 million last year.
Morgan’s assets slipped to $63.8 billion on June 30 from $64.1 billion a year earlier.
Under its bail-out plan, the Chicago-based Continental Illinois underwent a management change and gave the government the right to acquire control of the company if losses reach a certain prescribed level.
The banking company ranks 12th in the nation and is the parent of the nation’s 13th-largest bank, Continental Illinois National Bank.
It said its borrowing from a group of 28 banks averaged $3.1 billion for the quarter, down from $4 billion in the first quarter.
On June 30, borrowings from the bank group stood at $2, billion and Continental Illinois’ Fed borrowings were $540 million.
The banking company had a loan loss provision of $30 million in the second quarter. Its loan-loss reserve was $400 million on June 30.
