Cost Savings From Mergers, Automation Boost Banks’ Profits

First-quarter earnings surged at Chase Manhattan Corp., Citicorp and other U.S. banks, as cost savings from mergers and automation offset losses from bad credit card accounts.

Chase said earnings before merger charges rose 9.1%, while Citicorp’s bottom line grew 9%.

Seattle-based Washington Mutual Inc., which is locked in a takeover fight with H.F. Ahmanson & Co. for Chatsworth-based Great Western Financial Corp., said its first-quarter earnings rose 28% as the thrift built on its acquisition of American Savings Bank of Santa Ana to sell more consumer and mortgage loans and boost fees.

Washington Mutual, the third-largest U.S. thrift, said net income increased to $114.1 million, or 93 cents a share, from $88.8 million, or 75 cents, a year earlier. The latest per-share earnings beat the consensus analysts’ estimate of 90 cents.

The results show how banks are making up for a slowdown in growth in fees and lending by using big mergers to cut salaries and other expenses.

“The banks are becoming the most efficient since the 1950s, as evidenced in their earnings releases,” said Credit Suisse First Boston bank analyst Michael Mayo.

Profit was sapped as more U.S. consumers were overwhelmed by credit card bills. Chase wrote off $358 million in credit card accounts, up 33%, and Citicorp saw losses climb 40% to $656 million.

New York-based Chase Manhattan, the largest U.S. bank, said first-quarter profit before charges, mainly from a merger with New York-based Chemical Banking Corp., rose to $946 million, or $2.02 a share, from $867 million, or $1.82, a year earlier.

The earnings-per-share results were a penny shy of Wall Street’s expectations, and Chase shares rose as much as $2.125 to close at $92.625 on the New York Stock Exchange.

New York-based Citicorp, the No. 2 bank, said net income rose to $995 million, or $2.01 a share, from $914 million, or $1.82, in the same quarter last year.

The earnings beat analysts’ expectations.

At a Glance:

Banc One of Columbus, Ohio, said first-quarter net income rose 7% to $370.7 million, or 86 cents a share, from $345.9 million, or 77 cents, a year earlier. The results exceeded Wall Street estimates.

Pittsburgh-based PNC Bank said first-quarter net income rose to $266.3 million, or 81 cents a share, from $238.3 million, or 69 cents, a year earlier, beating expectations by a penny.

San Francisco-based Sumitomo Bank of California reported first-quarter net income of $9.7 million, or 50 cents per share, compared with net income of $11.7 million, or 62 cents, a year ago.

City National Corp. of Beverly Hills said first-quarter net income rose 14% to $18.0 million, or 38 cents per share, from $15.9 million, or 35 cents, in the year-earlier period.

Golden West Financial Corp., the Oakland-based parent of World Savings, reported first-quarter net income of $83.4 million, or $1.45 per share, compared with a net loss of $126.6 million, or $2.15, a year earlier.

Federal Home Loan Mortgage Corp., or Freddie Mac, said earnings rose about 9% in the first quarter to $329 million, or 44 cents a share, from $301 million, or 40 cents, a year earlier.

Comerica Inc. of Detroit said first-quarter earnings increased 6% to $124 million, or $1.10 a share, from $117 million, or 98 cents, a year earlier.