Chase Manhattan Posts 166% Jump in Profits

Chase Manhattan Corp. said Monday that its first-quarter earnings improved dramatically as it reaped the benefits of a cost-cutting plan, access to cheaper funds and improved revenues from its consumer banking operations.

The positive results came despite nagging problem loans. Chase set aside $240 million for possible loan losses and charged off as bad debt $270 million in loans for the three months ended March 31.

Chase, the nation’s third-biggest banking company, reported first-quarter net profits of $117 million, up 166% from net income of $44 million for the same period a year ago.

“We are encouraged by the first-quarter results,” Chase Chairman Tom Labrecque said. “We continue to make progress in the performance of our six core business areas, while advancing toward the capital and productivity improvements we announced last summer.”

He referred to an austerity plan announced last summer that led to the layoff or early retirement of 5,000 workers and sales of certain bank assets.

Bank analysts provided a mixed review of Chase’s earnings.

“The results are certainly on a depressed level, but better than a year ago despite the worsening asset quality,” said Raphael Soifer, analyst for Brown Bros. & Harriman Co.

Chase reported it wrote off $87 million in commercial real estate loans as bad debt during the quarter, up $72 million from the first quarter 1990. Overall, first-quarter loan charge-offs were $270 million, down $55 million from the same period a year ago.

Soifer said he won’t predict a turnaround for Chase until its loan portfolio improves. “And we haven’t seen that yet,” he said.

But Bear Stearns analyst Mark Alpert said Chase’s earnings were slightly above expectations and illustrated that the bank was gaining control of its expenses.

The bank’s loan portfolio, however, “will continue to be a function of the economy,” Alpert said.

The bank benefited from cheaper funds during the quarter. Interest rate margins--the gap between what a bank pays for funds and what it charges for interest--widened during the quarter to 3.83%, compared to 3.43% in the first quarter of 1990.