NYSE Traders’ Overall Profit Up 26.7% in 2nd Quarter

The overall profit of New York Stock Exchange member firms doing business with the public rose 26.7% in the second quarter, but 160 of the 386 companies lost money, the exchange said Monday.

In the April-June period, the investment companies had after-tax earnings of $365 million, compared to a net profit of $288 million in the same period of 1987, the NYSE said. The companies had a total profit of $745 million in the first six months of this year.

The 226 profitable companies had aggregate pretax earnings of $813 million, while the 160 unprofitable firms reported an aggregate loss of $261 million, the report said.

Jeff Schaefer, senior vice president at the Securities Industry Assn., said inflation pressures and concerns about higher interest rates had a negative effect on the securities business.

“In addition to lower volume, there was a lowering of securities prices in both the fixed income and equity markets,” Schaefer said. “And that’s very important because what determines commissions and trading profits are security prices.”

Revenue of the 386 companies was down slightly, dropping to $12.449 billion from $12.603 billion a year ago. The firms had revenue of $13.015 billion in the first quarter.

The NYSE said the after-tax profit in the second quarter represented a 4.0% annual return on member firms’ average net worth of $36.66 billion.

Commission revenue amounted to 17.9% of total revenue in the second quarter, down from 18.6% in the first quarter, the report said. Member firms’ assets rose 5.7% to $456.4 billion from $431.6 billion in the first quarter.

Capital, which includes ownership equity and subordinated liabilities, rose 2.1% from the previous quarter to a record $37.04 billion. First quarter capital was $36.275 billion.

The exchange said its specialist firms, which make markets for the stocks traded on the NYSE floor, saw their aggregate after-tax profit drop to $30 million in the second quarter. That was down 36% from $47 million in the same period last year and off 55% from $55 million in the first quarter.

The NYSE said the specialists had a 12.3% after-tax return on capital in the quarter, compared to 17.7% in the same period last year and 22.3% in the first quarter.