3 Major Brokerages Score Quarterly Gains Over ’91
Three major Wall Street brokerages on Tuesday reported strong profits in the second quarter as heavy business brought double-digit gains over last year’s April-June period.
Merrill Lynch & Co., the nation’s largest brokerage company, said its profit for the three months ended June 30 jumped 24%, while Paine-Webber Group Inc. reported a brisk 35% gain in profit. Primerica Corp., parent of Smith Barney, Harris Upham & Co., said earnings rose 28% in the quarter from the year earlier.
All three said the results were due to improvement in all lines of businesses and cost containment.
John Keefe, a New York-based brokerage industry consultant, said the results were respectable but much lower than the first-quarter results: Merrill’s second-quarter profit was down 18% from the first three months of 1992; Paine-Webber, down 38%, and Primerica, down 32%.
The stock markets were flooded with activity earlier this year after the Federal Reserve slashed interest rates in December, causing many investors to pull their money out of banks and put it into stocks.
Merrill Lynch earned $227.7 million, or $1.98 a share, in the quarter, up from $184.3 million, or $1.58 a share, in 1991.
Revenue shot up 10% to $3.3 billion from $3 billion last year.
The New York-based brokerage said results for the quarter and first half of the year reached record levels.
PaineWebber said it earned $45.76 million, or 93 cents a share, on revenue of $592.1 million for the three months ended June 30. In the second quarter of 1991, Paine-Webber reported profit of $33.78 million, or 70 cents a share, on revenue of $520.38 million.
The results were powered by strong gains in asset management business, up 21%; transactions, up 13%, and investment banking, up 9%. The company’s retail sales and market businesses gained market share and expanded staff during the year. Its capital markets unit reported a 34% gain in revenue, led by an increase in market share in government, mortgage and corporate bond dealings.
The financial services conglomerate Primerica, diversified in insurance, brokerage and consumer finance, reported net income of $150.5 million, or $1.36 a share, on revenue of $1.28 billion. That compares to profit of $117.3 million, or $1.05 a share, on revenue of $1.29 billion the year earlier.
The revenue figures exclude results from Primerica’s consumer finance arm, Fingerhut Cos.
Smith Barney, the brokerage subsidiary, reported net income of $42.4 million, up 13% from $37.4 million in the year-earlier period. The company said investment banking revenue grew 15% during the quarter.
